Eaton Vance Pennsylvanie Municipal Bond Fund

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-21227

 

 

Eaton Vance Pennsylvania Municipal Bond Fund

(Exact Name of Registrant as Specified in Charter)

 

 

Two International Place,

Boston, Massachusetts 02110

(Address of Principal Executive Offices)

 

 

Maureen A. Gemma

Two International Place,

Boston, Massachusetts 02110

(Name and Address of Agent for Services)

 

 

(Registrant’s Telephone Number) (617) 482-8260

Date of Fiscal Year End September 30

Date of Reporting Period September 30, 2013

 

 

 


Item 1. Reports to Stockholders


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Eaton Vance

Municipal Bond Funds

Annual Report

September 30, 2013

 

 

 

Municipal II (EIV)    •    California II (EIA)    •    Massachusetts (MAB)    •    Michigan (MIW)

New Jersey (EMJ)    •    New York II (NYH)    •    Ohio (EIO)    •    Pennsylvania (EIP)

 

LOGO


 

 

Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. Each Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and is not subject to the CFTC regulation. Because of its management of other strategies, each Fund’s adviser is registered with the CFTC as a commodity pool operator.

Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.


Annual Report September 30, 2013

Eaton Vance

Municipal Bond Funds

Table of Contents

 

Management’s Discussion of Fund Performance

     2   

Performance and Fund Profile

  
  

Municipal Bond Fund II

     4   

California Municipal Bond Fund II

     5   

Massachusetts Municipal Bond Fund

     6   

Michigan Municipal Bond Fund

     7   

New Jersey Municipal Bond Fund

     8   

New York Municipal Bond Fund II

     9   

Ohio Municipal Bond Fund

     10   

Pennsylvania Municipal Bond Fund

     11   
  

Endnotes and Additional Disclosures

     12   

Financial Statements

     13   

Report of Independent Registered Public Accounting Firm

     65   

Federal Tax Information

     66   

Annual Meeting of Shareholders

     67   

Dividend Reinvestment Plan

     68   

Board of Trustees’ Contract Approval

     70   

Management and Organization

     73   

Important Notices

     76   


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Management’s Discussion of Fund Performance1

 

 

Economic and Market Conditions

During the first seven months of the fiscal year ended September 30, 2013, interest rates declined to historic lows, driven by highly accommodative monetary policies instituted by central banks around the world. In December 2012, the U.S. Federal Reserve (the Fed) replaced Operation Twist, the central bank’s swapping of its short-term holdings for long-term Treasury bonds, with outright purchases of $45 billion of Treasuries each month. This was in addition to the monthly purchase of approximately $40 billion of agency mortgage-backed securities that it had begun just a few months before. These actions combined to put extraordinary downward pressure on yields, driving many investors to look for other sources of income. One beneficiary was the municipal bond market, which rallied during the first seven months of the period in response to strong investor demand.

In late May 2013, however, Fed Chairman Ben Bernanke surprised the markets by indicating that the Fed’s $85 billion in monthly asset purchases, known collectively as quantitative easing (QE), could be tapered sooner than most investors had expected. The negative effect on the bond market was swift and dramatic. Investors rushed to sell fixed-income assets in anticipation of rising interest rates, causing nearly every fixed-income asset class to decline dramatically in value.

Historic outflows had a particularly significant effect on the municipal bond market because, unlike other domestic fixed-income asset classes, the municipal market is primarily retail based and is generally impacted more by the actions of small individual investors than the other fixed-income asset classes. Even after the Fed tried to temper its comments and calm the markets, moderating the outflows in other fixed-income classes, heavy selling in municipals continued through August 2013. The selling abated in September 2013, after the Fed surprised the markets again by postponing its tapering of QE that many investors had thought was imminent. The Barclays Municipal Bond Index2 — an unmanaged index of municipal bonds traded in the United States — declined 2.21% for the one-year period, while the Funds’ benchmark, the Barclays Long (22+) Year Municipal Bond Index (the Index), lost 5.06%.

During the period, additional pressure on the municipal market came from the city of Detroit’s bankruptcy filing on July 18, 2013 and heightened attention to Puerto Rico’s fiscal woes throughout September 2013. Although

Detroit’s bankruptcy was not a surprise, because the city’s fiscal problems had been well-documented for many years, the bankruptcy’s negative headlines injected additional fear into the municipal bond market. That fear, combined with Puerto Rico’s well-publicized fiscal challenges, drove both institutional and retail investors to sell Puerto Rico bonds, exerting additional downward pressure on the market value of the bonds in late August and September 2013 as the Funds’ fiscal year was ending.

Fund Performance

For the fiscal year ended September 30, 2013, all of the Funds’ shares at net asset value (NAV) underperformed the -5.06% return of the Index.

The Funds’ overall strategy is to invest normally in higher-quality bonds (rated A7 or higher) with maturities of 10 years or more in order to capture their typically higher yields and a greater income stream.

Management hedges to various degrees against the greater potential risk of volatility at the long end of the yield curve by using Treasury futures and/or interest rate swaps in seeking to mitigate risk. As a risk management tactic within the overall Fund strategy, interest-rate hedging is intended to moderate performance on both the upside and the downside of the market. During this period of negative performance by municipal bonds, the Funds’ hedging through Treasury futures mitigated some of the downside and, thus, added to the performance of all Funds except the Michigan and Ohio Funds, relative to the Index.

The Funds’ use of leverage6 hurt performance versus the Index during the period. In managing the Funds, management employs leverage to seek to enhance the Funds’ tax-exempt income. The use of leverage has the effect of achieving additional exposure to the municipal market. Leverage magnifies a fund’s exposure to its underlying investments in both up and down markets. During this period of negative performance by municipal bonds, leverage was a key detractor from the Funds’ performance versus the Index.

Fund-specific Results

Eaton Vance Municipal Bond Fund II shares at NAV returned -5.83%, underperforming the -5.06% return of the Index. The main detractors from performance versus the Index were leverage, as noted above, and security selection in A-rated

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  2  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Management’s Discussion of Fund Performance — continued

 

 

bonds. Significant contributors to results versus the Index included an underweighting in Puerto Rico bonds, an overweighting and security selection in zero-coupon bonds, an overweighting and security selection in prerefunded bonds and the Fund’s hedging strategy.

Eaton Vance California Municipal Bond Fund II shares at NAV returned -6.75%, underperforming the -5.06% return of the Index. Detractors from performance versus the Index included leverage, security selection in bonds with maturities of 10-20 years, and an overweighting and security selection in prerefunded bonds. The Fund’s hedging strategy contributed to results versus the Index as did an underweighting and security selection in Puerto Rico bonds, as well as an overweighting and security selection in zero-coupon bonds.

Eaton Vance Massachusetts Municipal Bond Fund shares at NAV returned -10.28%, underperforming the -5.06% return of the Index. Key detractors from performance relative to the Index included leverage, an overweighting and security selection in the education sector and security selection in bonds with 10-20 years remaining to maturity. In contrast, security selection in Puerto Rico and health care bonds, an overweighting in prerefunded bonds and the Fund’s hedging strategy all helped performance versus the Index.

Eaton Vance Michigan Municipal Bond Fund shares at NAV returned -7.29%, underperforming the -5.06% return of the Index. Leverage dragged on performance versus the Index as did security selection in bonds with maturities of 10-20 years, security selection in A-rated bonds, and an overweighting and security selection in 4-4 1/2% coupon bonds. Significant contributors to results versus the Index included an underweighting and security selection in Puerto Rico bonds, an overweighting in prerefunded bonds and security selection in zero-coupon bonds.

Eaton Vance New Jersey Municipal Bond Fund shares at NAV returned -5.48%, underperforming the -5.06% return of the Index. Detractors from performance versus the Index included leverage, an overweighting and security selection in the lease/ COP (certificate of participation) sector and security selection in bonds with maturities of 10-20 years. Contributors to results versus the Index included an underweighting and security selection in Puerto Rico bonds, security selection in BBB-rated and zero-coupon bonds, and the Fund’s hedging strategy.

Eaton Vance New York Municipal Bond Fund II shares at NAV returned -6.01%, underperforming the -5.06% return of the Index. Key detractors from results versus the Index included leverage, security selection in AAA-rated bonds and security selection in electric utility bonds. In contrast, performance versus the Index was helped by an underweighting and security selection in both Puerto Rico bonds and BBB-rated bonds, security selection in bonds with maturities of 30 years or more and the Fund’s hedging strategy.

Eaton Vance Ohio Municipal Bond Fund shares at NAV returned -6.46%, underperforming the -5.06% return of the Index. Significant detractors from results versus the Index included leverage, security selection and an overweighing in the education sector, and security selection in the transportation and water & sewer sectors. In contrast, results versus the Index were helped by an underweighting in Puerto Rico bonds and by security selection in both zero-coupon bonds and bonds rated BBB and below.

Eaton Vance Pennsylvania Municipal Bond Fund shares at NAV returned -6.69%, underperforming the -5.06% return of the Index. Leverage was a key detractor from performance versus the Index, as was security selection in bonds with maturities of 20 years or more. Contributors to results versus the Index included security selection in water & sewer bonds and in BBB-rated bonds, an overweighting in pre-refunded bonds, and the Fund’s hedging strategy.

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  3  


Eaton Vance

Municipal Bond Fund II

September 30, 2013

 

Performance2,3

 

Portfolio Manager William H. Ahern, Jr., CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -5.83      8.91      4.71

Fund at Market Price

             -14.20         6.53         4.70   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -5.41
           
Distributions5                                

Total Distributions per share for the period

            $ 0.757   

Distribution Rate at NAV

              6.40

Taxable-Equivalent Distribution Rate at NAV

              11.31

Distribution Rate at Market Price

              6.76

Taxable-Equivalent Distribution Rate at Market Price

              11.94
           
% Total Leverage6                                

Auction Preferred Shares (APS)

              21.79

Residual Interest Bond (RIB)

              20.42   

Fund Profile

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    8.1   

BBB

    5.7

AA

    66.2      

BB

    0.2   

A

    18.4      

Not Rated

    1.4   

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  4  


Eaton Vance

California Municipal Bond Fund II

September 30, 2013

 

Performance2,3

 

Portfolio Manager Cynthia J. Clemson

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -6.75      8.00      4.38

Fund at Market Price

             -12.29         9.17         4.47   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -4.33
           
Distributions5                                

Total Distributions per share for the period

            $ 0.751   

Distribution Rate at NAV

              6.21

Taxable-Equivalent Distribution Rate at NAV

              12.66

Distribution Rate at Market Price

              6.49

Taxable-Equivalent Distribution Rate at Market Price

              13.23
           
% Total Leverage6                                

APS

              31.60

RIB

              12.16   

Fund Profile

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    15.4   

BBB

    1.9

AA

    61.1      

Not Rated

    1.9   

A

    19.7        

 

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  5  


Eaton Vance

Massachusetts Municipal Bond Fund

September 30, 2013

 

Performance2,3

 

Portfolio Manager Craig R. Brandon, CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -10.28      8.36      5.07

Fund at Market Price

             -20.01         3.99         4.41   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -7.54
           
Distributions5                                

Total Distributions per share for the period

            $ 0.787   

Distribution Rate at NAV

              5.62

Taxable-Equivalent Distribution Rate at NAV

              10.48

Distribution Rate at Market Price

              6.08

Taxable-Equivalent Distribution Rate at Market Price

              11.34
           
% Total Leverage6                                

APS

              33.25

RIB

              8.16   

Fund Profile

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    17.2   

BBB

    1.9

AA

    46.8      

Not Rated

    5.2   

A

    28.9        

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  6  


Eaton Vance

Michigan Municipal Bond Fund

September 30, 2013

 

Performance2,3

 

Portfolio Manager William H. Ahern, Jr., CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -7.29      7.47      5.04

Fund at Market Price

             -21.98         9.19         3.97   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -10.41
           
Distributions5                                

Total Distributions per share for the period

            $ 0.783   

Distribution Rate at NAV

              5.54

Taxable-Equivalent Distribution Rate at NAV

              10.22

Distribution Rate at Market Price

              6.18

Taxable-Equivalent Distribution Rate at Market Price

              11.40
           
% Total Leverage6                                

APS

              40.07

Fund Profile

 

 

 

LOGO

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  7  


Eaton Vance

New Jersey Municipal Bond Fund

September 30, 2013

 

Performance2,3

 

Portfolio Manager Adam A. Weigold, CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -5.48      8.64      5.28

Fund at Market Price

             -18.01         6.41         4.28   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -10.59
           
Distributions5                                

Total Distributions per share for the period

            $ 0.727   

Distribution Rate at NAV

              5.34

Taxable-Equivalent Distribution Rate at NAV

              10.36

Distribution Rate at Market Price

              5.97

Taxable-Equivalent Distribution Rate at Market Price

              11.59
           
% Total Leverage6                                

APS

              36.27

RIB

              0.42   

Fund Profile

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    6.5   

A

    25.9

AA

    56.4      

BBB

    11.2   

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

 

  8  


Eaton Vance

New York Municipal Bond Fund II

September 30, 2013

 

Performance2,3

 

Portfolio Manager Craig R. Brandon, CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -6.01      8.12      4.75

Fund at Market Price

             -16.01         7.66         4.48   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -10.18
           
Distributions5                                

Total Distributions per share for the period

            $ 0.687   

Distribution Rate at NAV

              5.55

Taxable-Equivalent Distribution Rate at NAV

              10.75

Distribution Rate at Market Price

              6.18

Taxable-Equivalent Distribution Rate at Market Price

              11.97
           
% Total Leverage6                                

APS

              24.67

RIB

              16.18   

Fund Profile

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    17.9   

A

    29.4

AA

    47.0      

BBB

    5.7   
 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  9  


Eaton Vance

Ohio Municipal Bond Fund

September 30, 2013

 

Performance2,3

 

Portfolio Manager William H. Ahern, Jr., CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -6.46      7.80      3.95

Fund at Market Price

             -20.91         6.43         3.35   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -6.87
           
Distributions5                                

Total Distributions per share for the period

            $ 0.719   

Distribution Rate at NAV

              5.74

Taxable-Equivalent Distribution Rate at NAV

              10.72

Distribution Rate at Market Price

              6.17

Taxable-Equivalent Distribution Rate at Market Price

              11.53
           
% Total Leverage6                                

APS

              33.75

RIB

              4.71   

Fund Profile

 

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    3.6   

BBB

    3.8

AA

    59.1      

Not Rated

    0.1   

A

    33.4        

    

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

 

 

  10  


Eaton Vance

Pennsylvania Municipal Bond Fund

September 30, 2013

 

Performance2,3

 

Portfolio Manager Adam A. Weigold, CFA

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/29/2002         -6.69      8.51      5.25

Fund at Market Price

             -22.03         4.26         4.46   

Barclays Long (22+) Year Municipal Bond Index

             -5.06      7.24      4.82
           
% Premium/Discount to NAV4                                
              -8.81
           
Distributions5                                

Total Distributions per share for the period

            $ 0.806   

Distribution Rate at NAV

              6.08

Taxable-Equivalent Distribution Rate at NAV

              11.08

Distribution Rate at Market Price

              6.67

Taxable-Equivalent Distribution Rate at Market Price

              12.16
           
% Total Leverage6                                

APS

              34.06

RIB

              6.96   

Fund Profile

 

 

LOGO

The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.6 Absent such securities, credit quality (% of total investments) is as follows:7

 

AAA

    0.5   

BBB

    2.5

AA

    52.1      

Not Rated

    5.5   

A

    39.4        

    

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested and includes management fees and other expenses. Fund performance at market price will differ from its results at NAV due to factors such as changing per-ceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distribu-tions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their origi-nal cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  11  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Endnotes and Additional Disclosures

 

 

1 

The views expressed in this report are those of the portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance and the Fund(s) disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as “forward looking statements”. The Fund’s actual future results may differ significantly from those stated in any forward looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund’s filings with the Securities and Exchange Commission.

 

2 

Barclays Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. Barclays Long (22+) Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities of 22 years or more. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index.

 

3 

Performance results reflect the effects of leverage. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable.

 

4 

The shares of the Fund often trade at a discount or premium from their net asset value. The discount or premium of the Fund may vary over time and may be higher or lower than what is quoted in this report. For up-to-date premium/discount information, please refer to http://eatonvance.com/closedend.

 

5 

The Distribution Rate is based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV or market price at the end of the period. The Fund’s distributions may be comprised of amounts characterized for federal income tax purposes as tax-exempt income, ordinary income, net realized capital gains and nondividend distributions, also known as return of capital. For additional information about nondividend distributions, please refer to Eaton Vance Closed- End Fund Distribution Notices (19a) posted on our website, eatonvance.com. The Fund will determine the federal income tax character of distributions paid to a shareholder after the end of the calendar year. This is reported on the IRS form 1099-DIV and provided to the shareholder shortly after each year-end. The Fund’s distributions are determined by the investment adviser based on its current assessment of the Fund’s long-term return potential. As portfolio and market conditions change, the rate of distributions paid by the Fund could change. Taxable-equivalent performance is based on the highest combined federal and state income tax rates, where applicable. Lower tax rates would result in lower tax-equivalent performance. Actual tax rates will vary depending on your income, exemptions and deductions. Rates do not include local taxes.

 

6 

Fund employs RIB financing and/or APS leverage. The leverage created by RIB investments and APS provides an opportunity for increased income but, at the same time, creates special risks (including the likelihood of greater price volatility). The cost of leverage rises and falls with changes in short-term interest rates. See “Floating Rate Notes Issued in Conjunction with Securities Held” in the notes to the financial statements for more information about RIB financing. RIB leverage represents the amount of Floating Rate Notes outstanding at period end as a percentage of Fund net assets applicable to common shares plus APS and Floating Rate Notes. APS leverage represents the liquidation value of the Fund’s APS outstanding at period end as a percentage of Fund net assets applicable to common shares plus APS and Floating Rate Notes. The Fund may be required to maintain prescribed asset coverage for its leverage and may be required to reduce its leverage at an inopportune time. Floating Rate Notes in both calculations reflect the effect of RIBs purchased in secondary market transactions, if applicable.

 

7 

Ratings are based on Moody’s, S&P or Fitch, as applicable. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by Standard and Poor’s or Fitch (Baa or higher by Moody’s) are considered to be investment grade quality. Credit ratings are based largely on the rating agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and does not necessarily reflect its assessment of the volatility of a security’s market value or of the liquidity of an investment in the security. If securities are rated differently by the rating agencies, the higher rating is applied. Holdings designated as “Not Rated” are not rated by the national rating agencies stated above.

 

   Fund profile subject to change due to active management.
 

 

  12  


Eaton Vance

Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Municipal Securities — 171.1%    
   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Education — 12.0%

               

Connecticut Health and Educational Facilities Authority, (Wesleyan University), 5.00%, 7/1/39(1)

  $ 2,200      $ 2,281,444   

Houston, TX, Higher Education Finance Corp., (William Marsh Rice University), 5.00%, 5/15/35

    1,745        1,913,864   

Massachusetts Health and Educational Facilities Authority, (Harvard University), 5.50%, 11/15/36

    2,710        3,015,417   

New Jersey Educational Facilities Authority, (Georgian Court University), 5.25%, 7/1/37

    1,500        1,504,425   

New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/40(1)

    1,500        1,581,825   

North Carolina Capital Facilities Finance Agency, (Duke University), 5.00%, 10/1/38(1)

    500        531,840   

Tennessee School Bond Authority, 5.50%, 5/1/38

    1,000        1,074,510   

University of Virginia, 5.00%, 6/1/40

    1,500        1,593,555   

Vermont Educational and Health Buildings Financing Agency, (Middlebury College), 5.00%, 11/1/40

    750        778,590   
   
    $ 14,275,470   
   

Electric Utilities — 3.0%

  

Pima County, AZ, Industrial Development Authority, (Tucson Electric Power Co.), 5.25%, 10/1/40

  $ 1,300      $ 1,290,718   

South Carolina Public Service Authority, (Santee Cooper), 5.50%, 1/1/38

    1,420        1,501,309   

Wyandotte County/Kansas City, KS, Unified Government Board of Public Utilities, 5.00%, 9/1/36

    685        708,502   
   
    $ 3,500,529   
   

General Obligations — 15.4%

  

Chicago Park District, IL, (Harbor Facilities), 5.25%, 1/1/37(1)

  $ 1,680      $ 1,740,278   

Delaware Valley, PA, Regional Finance Authority, 5.75%, 7/1/32

    2,500        2,641,625   

Hawaii, 5.00%, 12/1/29

    2,500        2,756,850   

Hawaii, 5.00%, 12/1/30

    1,000        1,095,310   

Mississippi, 5.00%, 10/1/36(1)

    1,725        1,822,773   

New York, 5.00%, 2/15/34(1)

    2,750        2,927,623   

New York, NY, 5.00%, 8/1/31

    3,500        3,750,110   

Oregon, 5.00%, 8/1/36

    1,000        1,058,370   

Virginia Beach, VA, 4.00%, 4/1/27

    220        228,276   

Virginia Beach, VA, 4.00%, 4/1/28

    230        236,348   
   
    $ 18,257,563   
   

Hospital — 6.2%

  

Camden County, NJ, Improvement Authority, (Cooper Health System), 5.00%, 2/15/35

  $ 870      $ 806,890   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Hospital (continued)

  

Camden County, NJ, Improvement Authority, (Cooper Health System), 5.25%, 2/15/27

  $ 545      $ 545,055   

Hawaii Department of Budget and Finance, (Hawaii Pacific Health), 5.50%, 7/1/38(2)

    360        372,467   

Hawaii Department of Budget and Finance, (Hawaii Pacific Health), 5.60%, 7/1/33

    500        500,225   

Highlands County, FL, Health Facilities Authority, (Adventist Health System), 5.25%, 11/15/36

    1,285        1,303,388   

Knox County, TN, Health, Educational and Housing Facilities Board, (Covenant Health), 0.00%, 1/1/38

    1,850        458,005   

Knox County, TN, Health, Educational and Housing Facilities Board, (Covenant Health), 0.00%, 1/1/39

    5,000        1,161,150   

New Jersey Health Care Facilities Financing Authority, (Robert Wood Johnson University Hospital), 5.25%, 7/1/35

    615        634,612   

Tarrant County Cultural Education Facilities Finance Corp., TX, (Cook Children’s Medical Center), 5.25%, 12/1/39

    1,500        1,545,180   
   
    $ 7,326,972   
   

Industrial Development Revenue — 1.0%

  

Maricopa County, AZ, Pollution Control Corp., (El Paso Electric Co.), 4.50%, 8/1/42

  $ 595      $ 517,127   

St. John Baptist Parish, LA, (Marathon Oil Corp.), 5.125%, 6/1/37

    645        640,143   
   
    $ 1,157,270   
   

Insured – Education — 7.0%

  

Massachusetts Development Finance Agency, (Boston University), (XLCA), 6.00%, 5/15/59

  $ 2,500      $ 2,783,550   

Miami-Dade County, FL, Educational Facilities Authority, (University of Miami), (AMBAC), (BHAC), 5.00%, 4/1/31

    1,555        1,625,053   

University of South Alabama, (BHAC), 5.00%, 8/1/38

    3,900        3,943,602   
   
    $ 8,352,205   
   

Insured – Electric Utilities — 8.0%

  

American Municipal Power-Ohio, Inc., OH, (Prairie State Energy Campus), (AGC), 5.75%, 2/15/39

  $ 1,000      $ 1,062,470   

Chelan County, WA, Public Utility District No. 1, (Columbia River), (NPFG), 0.00%, 6/1/23

    6,335        4,491,958   

Mississippi Development Bank, (Municipal Energy), (XLCA), 5.00%, 3/1/41

    2,205        2,119,071   

South Carolina Public Service Authority, (Santee Cooper), (BHAC), 5.50%, 1/1/38

    1,595        1,758,025   
   
    $ 9,431,524   
   

Insured – Escrowed / Prerefunded — 7.1%

  

Centre County, PA, Hospital Authority, (Mount Nittany Medical Center), (AGC), Prerefunded to 11/15/14, 6.125%, 11/15/39

  $ 1,695      $ 1,807,192   
 

 

  13   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
             

Insured – Escrowed / Prerefunded (continued)

  

Centre County, PA, Hospital Authority, (Mount Nittany Medical Center), (AGC), Prerefunded to 11/15/14, 6.25%, 11/15/44

  $ 450      $ 480,420   

Washington, (AGM), Prerefunded to 7/1/16, 5.00%, 7/1/25(1)

    5,500        6,157,250   
   
    $ 8,444,862   
   

Insured – General Obligations — 10.4%

  

Cincinnati, OH, City School District, (AGM), (FGIC), 5.25%, 12/1/30

  $ 750      $ 858,030   

Coast Community College District, CA, (Election of 2002), (AGM), 0.00%, 8/1/33

    17,000        5,939,120   

Goodyear, AZ, (NPFG), 3.00%, 7/1/26

    1,315        1,229,091   

Palm Springs, CA, Unified School District, (Election of 2008), (AGC), 5.00%, 8/1/33

    2,750        2,852,575   

Philadelphia, PA, (AGC), 7.00%, 7/15/28

    1,250        1,400,737   
   
    $ 12,279,553   
   

Insured – Hospital — 20.6%

  

Arizona Health Facilities Authority, (Banner Health), (BHAC), 5.375%, 1/1/32

  $ 1,750      $ 1,826,440   

California Statewide Communities Development Authority, (Sutter Health), (AGM), 5.05%, 8/15/38(1)

    1,500        1,508,280   

Colorado Health Facilities Authority, (Catholic Health), (AGM), 5.10%, 10/1/41(1)

    2,200        2,207,480   

Highlands County, FL, Health Facilities Authority, (Adventist Health System), (BHAC), 5.25%, 11/15/36(1)

    3,000        3,168,300   

Highlands County, FL, Health Facilities Authority, (Adventist Health System), (NPFG), 5.00%, 11/15/35

    1,490        1,496,317   

Illinois Finance Authority, (Children’s Memorial Hospital), (AGC), 5.25%, 8/15/47(1)

    2,500        2,511,024   

Indiana Health and Educational Facility Finance Authority, (Sisters of St. Francis Health Services), (AGM), 5.25%, 5/15/41(1)

    750        756,495   

Indiana Health and Educational Facility Finance Authority, (Sisters of St. Francis Health Services), (AGM), 5.25%, 5/15/41

    1,750        1,765,155   

Maricopa County, AZ, Industrial Development Authority, (Catholic Healthcare West), (BHAC), 5.25%, 7/1/32

    2,090        2,228,985   

New Jersey Health Care Facilities Financing Authority, (Meridian Health System), Series V, (AGC), 5.00%, 7/1/38(1)

    500        507,245   

New Jersey Health Care Facilities Financing Authority, (Virtua Health), (AGC), 5.50%, 7/1/38

    2,245        2,313,338   

Washington Health Care Facilities Authority, (MultiCare Health System), (AGC), 6.00%, 8/15/39

    1,545        1,653,413   

Washington Health Care Facilities Authority, (Providence Health Care), (AGM), 5.25%, 10/1/33

    2,300        2,441,128   
   
    $ 24,383,600   
   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Insured – Industrial Development Revenue — 1.1%

  

Pennsylvania Economic Development Financing Authority, (Aqua Pennsylvania, Inc.), (BHAC), 5.00%, 10/1/39

  $ 1,340      $ 1,362,914   
   
    $ 1,362,914   
   

Insured – Lease Revenue / Certificates of Participation — 5.9%

  

Essex County, NJ, Improvement Authority, (NPFG), 5.50%, 10/1/30

  $ 1,000      $ 1,151,560   

New Jersey Economic Development Authority, (School Facilities Construction), (AGC), 5.50%, 12/15/34

    875        953,479   

San Diego County, CA, Water Authority, Certificates of Participation, (AGM), 5.00%, 5/1/38(1)

    3,250        3,385,525   

Tri-Creek Middle School Building Corp., IN, (AGM), 5.25%, 1/15/34(1)

    1,500        1,545,300   
   
    $ 7,035,864   
   

Insured – Other Revenue — 1.6%

  

Harris County-Houston, TX, Sports Authority, (NPFG), 0.00%, 11/15/34

  $ 2,540      $ 686,511   

New York, NY, Industrial Development Agency, (Yankee Stadium), (AGC), 7.00%, 3/1/49

    1,000        1,165,040   
   
    $ 1,851,551   
   

Insured – Solid Waste — 1.1%

  

Palm Beach County, FL, Solid Waste Authority, (BHAC), 5.00%, 10/1/24

  $ 740      $ 846,693   

Palm Beach County, FL, Solid Waste Authority, (BHAC), 5.00%, 10/1/26

    425        476,060   
   
    $ 1,322,753   
   

Insured – Special Tax Revenue — 2.4%

  

Miami-Dade County, FL, Professional Sports Franchise Facilities, (AGC), 7.00%, (0.00% until 10/1/19), 10/1/39

  $ 3,000      $ 2,336,940   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    4,440        561,749   
   
    $ 2,898,689   
   

Insured – Student Loan — 1.3%

  

Maine Educational Loan Authority, (AGC), 5.625%, 12/1/27

  $ 1,425      $ 1,528,754   
   
    $ 1,528,754   
   

Insured – Transportation — 25.0%

  

Chicago, IL, (O’Hare International Airport), (AGM), 5.00%, 1/1/29

  $ 260      $ 262,668   

Chicago, IL, (O’Hare International Airport), (AGM), 5.125%, 1/1/30

    200        202,114   

Chicago, IL, (O’Hare International Airport), (AGM), 5.125%, 1/1/31

    180        181,372   

Chicago, IL, (O’Hare International Airport), (AGM), 5.25%, 1/1/32

    100        101,308   
 

 

  14   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
             

Insured – Transportation (continued)

  

Clark County, NV, (Las Vegas-McCarran International Airport), (AGM), 5.25%, 7/1/39

  $ 1,585      $ 1,649,921   

E-470 Public Highway Authority, CO, (NPFG), 0.00%, 9/1/22

    7,800        5,332,236   

Manchester, NH, (Manchester-Boston Regional Airport), (AGM), 5.125%, 1/1/30

    1,305        1,358,166   

Maryland Transportation Authority, (AGM), 5.00%, 7/1/41(1)

    10,000        10,255,000   

Metropolitan Washington, D.C., Airports Authority, (BHAC), 5.00%, 10/1/24

    1,000        1,137,800   

Metropolitan Washington, D.C., Airports Authority, (BHAC), 5.00%, 10/1/29

    535        571,867   

Nevada Department of Business and Industry, (Las Vegas Monorail -1st Tier), (AMBAC), 0.00%, 1/1/20(3)

    13,885        2,220,073   

New Jersey Transportation Trust Fund Authority, (AGC), 5.50%, 12/15/38

    1,040        1,118,593   

North Carolina Turnpike Authority, (Triangle Expressway System), (AGC), 5.50%, 1/1/29

    255        277,476   

North Carolina Turnpike Authority, (Triangle Expressway System), (AGC), 5.75%, 1/1/39

    290        311,819   

North Texas Tollway Authority, (BHAC), 5.75%, 1/1/48

    1,750        1,922,375   

Pennsylvania Turnpike Commission, (AGM), 5.25%, 7/15/30

    2,540        2,739,237   
   
    $ 29,642,025   
   

Insured – Water and Sewer — 9.1%

  

Bossier City, LA, Utilities Revenue, (BHAC), 5.25%, 10/1/26

  $ 670      $ 730,736   

Bossier City, LA, Utilities Revenue, (BHAC), 5.25%, 10/1/27

    420        460,408   

Bossier City, LA, Utilities Revenue, (BHAC), 5.50%, 10/1/38

    660        712,681   

Chicago, IL, Wastewater Transmission Revenue, (BHAC), 5.50%, 1/1/38

    1,635        1,763,070   

Detroit, MI, Water Supply System, (NPFG), 5.00%, 7/1/34

    705        639,752   

District of Columbia Water and Sewer Authority, (AGC), 5.00%, 10/1/34(1)

    1,250        1,306,575   

Houston, TX, Utility System, (AGM), (BHAC), 5.00%, 11/15/33

    435        456,415   

Massachusetts Water Resources Authority, (AGM), 5.25%, 8/1/35(4)

    1,000        1,128,270   

New York, NY, Municipal Water Finance Authority, (BHAC), 5.75%, 6/15/40

    2,205        2,462,875   

Pearland, TX, Waterworks and Sewer Systems, (NPFG), 3.50%, 9/1/31

    1,220        1,097,475   
   
    $ 10,758,257   
   

Lease Revenue / Certificates of Participation — 6.7%

  

New Jersey Health Care Facilities Financing Authority, (Hospital Asset Transformation Program), 5.75%, 10/1/31

  $ 2,235      $ 2,493,925   

North Carolina, Capital Improvement Limited Obligation Bonds, 5.00%, 5/1/30

    5,000        5,409,200   
   
    $ 7,903,125   
   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Other Revenue — 1.8%

  

Oregon Department of Administrative Services, Lottery Revenue, 5.25%, 4/1/30

  $ 1,300      $ 1,453,530   

Texas Municipal Gas Acquisition and Supply Corp. III, Gas Supply Revenue, 5.00%, 12/15/29

    485        474,471   

Texas Municipal Gas Acquisition and Supply Corp. III, Gas Supply Revenue, 5.00%, 12/15/30

    260        251,825   
   
    $ 2,179,826   
   

Senior Living / Life Care — 0.2%

  

Maryland Health and Higher Educational Facilities Authority, (Charlestown Community, Inc.), 6.125%, 1/1/30

  $ 235      $ 249,575   
   
    $ 249,575   
   

Special Tax Revenue — 7.7%

  

Homewood, AL, City Board of Education, 5.00%, 4/1/32

  $ 1,880      $ 1,974,808   

Maryland State Department of Transportation, 5.00%, 2/15/28

    1,500        1,670,865   

Massachusetts Bay Transportation Authority, Sales Tax Revenue, 5.25%, 7/1/33

    750        845,753   

Michigan Trunk Line Fund, 5.00%, 11/15/30

    110        117,404   

Michigan Trunk Line Fund, 5.00%, 11/15/31

    125        132,879   

Michigan Trunk Line Fund, 5.00%, 11/15/33

    105        110,285   

Michigan Trunk Line Fund, 5.00%, 11/15/36

    80        83,523   

New York, NY, Transitional Finance Authority, Future Tax Revenue, 5.50%, 11/1/35(1)(5)

    3,800        4,200,368   
   
    $ 9,135,885   
   

Transportation — 12.4%

  

Dallas and Fort Worth, TX, (Dallas/Fort Worth International Airport), 5.25%, 11/1/30

  $ 640      $ 683,366   

Dallas and Fort Worth, TX, (Dallas/Fort Worth International Airport), 5.25%, 11/1/31

    990        1,050,450   

Delaware River Port Authority of Pennsylvania and New Jersey, 5.00%, 1/1/35

    1,715        1,783,909   

Los Angeles, CA, Department of Airports, (Los Angeles International Airport), 5.25%, 5/15/28

    465        502,163   

Metropolitan Transportation Authority, NY, 5.25%, 11/15/38

    865        897,368   

Miami-Dade County, FL, (Miami International Airport), 5.00%, 10/1/41

    2,100        2,112,327   

New York Liberty Development Corp., (4 World Trade Center), 5.00%, 11/15/31

    1,070        1,104,550   

New York Thruway Authority, 5.00%, 1/1/42

    445        455,542   

Orlando-Orange County, FL, Expressway Authority, Series A, 5.00%, 7/1/35

    420        427,673   

Orlando-Orange County, FL, Expressway Authority, Series A, 5.00%, 7/1/40

    375        378,608   

Port Authority of New York and New Jersey, 4.00%, 7/15/32(1)

    1,400        1,385,328   
 

 

  15   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
             

Transportation (continued)

  

South Carolina Transportation Infrastructure Bank, 5.25%, 10/1/40

  $ 1,000      $ 1,049,090   

Texas Transportation Commission, (Central Texas Turnpike System), 5.00%, 8/15/41

    275        269,313   

Triborough Bridge and Tunnel Authority, NY, 5.00%, 11/15/37

    2,500        2,552,600   
   
    $ 14,652,287   
   

Water and Sewer — 4.1%

  

Chicago, IL, Water Revenue, 5.00%, 11/1/42

  $ 1,000      $ 999,960   

Detroit, MI, Sewage Disposal System, 5.00%, 7/1/32

    1,555        1,408,830   

Detroit, MI, Sewage Disposal System, 5.25%, 7/1/39

    380        344,208   

Detroit, MI, Water Supply System, 5.25%, 7/1/41

    300        271,611   

Marco Island, FL, Utility System, 5.00%, 10/1/34

    205        211,845   

Marco Island, FL, Utility System, 5.00%, 10/1/40

    910        929,938   

New York, NY, Municipal Water Finance Authority, (Water and Sewer System), 5.00%, 6/15/37

    720        728,582   
   
    $ 4,894,974   
   

Total Tax-Exempt Municipal Securities — 171.1%
(identified cost $203,248,724)

   

  $ 202,826,027   
   
Corporate Bonds & Notes — 0.0%(6)   
   
Security   Principal
Amount
(000’s omitted)
    Value  

Municipal — 0.0%(6)

  

Las Vegas Monorail Co., Jr. Subordinated Notes, 3.00% to 12/31/15,
5.50%, 7/15/55(7)(8)

  $ 47      $ 4,724   

Las Vegas Monorail Co., Sr. Secured Notes, 5.50%, 7/15/19(7)(8)

    162        24,473   
   

Total Corporate Bonds & Notes — 0.0%(6)
(identified cost $6,129)

   

  $ 29,197   
   

Total Investments — 171.1%
(identified cost $203,254,853)

   

  $ 202,855,224   
   

Auction Preferred Shares Plus Cumulative Unpaid Dividends — (37.7)%

  

  $ (44,700,562
   

Other Assets, Less Liabilities — (33.4)%

  

  $ (39,585,723
   

Net Assets Applicable to Common Shares — 100.0%

  

  $ 118,568,939   
   

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
BHAC     Berkshire Hathaway Assurance Corp.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.
XLCA     XL Capital Assurance, Inc.

At September 30, 2013, the concentration of the Fund’s investments in the various states, determined as a percentage of total investments, is as follows:

 

 

New York      11.5%   
Others, representing less than 10% individually      88.5%   

The Fund invests primarily in debt securities issued by municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 58.8% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 0.4% to 22.1% of total investments.

 

(1) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

(2) 

When-issued security.

 

(3) 

Defaulted security. Issuer has defaulted on the payment of interest or has filed for bankruptcy.

 

(4) 

Security (or a portion thereof) has been segregated to cover payable for when-issued securities.

 

(5) 

Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $1,350,368.

 

(6) 

Amount is less than 0.05%.

 

(7) 

For fair value measurement disclosure purposes, security is categorized as Level 3 (see Note 10).

 

(8) 

Represents a payment-in-kind security which may pay all or a portion of interest in additional par.

 

 

  16   See Notes to Financial Statements.


Eaton Vance

California Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments

 

 

 

Tax-Exempt Investments — 171.3%   
   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Education — 18.9%

               

California Educational Facilities Authority, (Claremont McKenna College), 5.00%, 1/1/39

  $ 1,370      $ 1,429,622   

California Educational Facilities Authority, (Harvey Mudd College), 5.25%, 12/1/31

    395        423,689   

California Educational Facilities Authority, (Harvey Mudd College), 5.25%, 12/1/36

    160        169,013   

California Educational Facilities Authority, (Loyola Marymount University), 5.00%, 10/1/22

    70        79,695   

California Educational Facilities Authority, (Loyola Marymount University), 5.00%, 10/1/30

    380        393,737   

California Educational Facilities Authority, (Santa Clara University), 5.00%, 2/1/29

    890        951,143   

California Educational Facilities Authority, (Stanford University), 5.00%, 6/1/43

    525        606,144   

California Educational Facilities Authority, (University of San Francisco), 6.125%, 10/1/36

    115        131,775   

California Educational Facilities Authority, (University of Southern California), 5.25%, 10/1/39

    1,200        1,288,884   

California Educational Facilities Authority, (University of the Pacific), 5.00%, 11/1/30

    330        346,084   

California Municipal Finance Authority, (University of San Diego), 5.00%, 10/1/31

    210        218,135   

California Municipal Finance Authority, (University of San Diego), 5.00%, 10/1/35

    145        147,487   

California Municipal Finance Authority, (University of San Diego), 5.25%, 10/1/26

    405        443,516   

California Municipal Finance Authority, (University of San Diego), 5.25%, 10/1/27

    425        460,925   

California Municipal Finance Authority, (University of San Diego), 5.25%, 10/1/28

    450        484,367   

University of California, 5.25%, 5/15/39

    1,000        1,062,880   
                 
  $ 8,637,096   
                 

Electric Utilities — 7.0%

               

Los Angeles Department of Water and Power, Electric System Revenue, 5.25%, 7/1/32

  $ 745      $ 804,399   

Sacramento Municipal Utility District, 5.00%, 8/15/30

    420        447,867   

Sacramento Municipal Utility District, 5.00%, 8/15/31

    125        132,339   

Southern California Public Power Authority, (Tieton Hydropower), 5.00%, 7/1/30

    1,000        1,071,130   

Vernon, Electric System Revenue, 5.125%, 8/1/21

    675        727,643   
                 
  $ 3,183,378   
                 
Security   Principal
Amount
(000’s omitted)
    Value  
   

General Obligations — 15.5%

               

California, 5.50%, 11/1/35

  $ 1,300      $ 1,399,307   

Larkspur-Corte Madera School District, (Election of 2011), 4.00%, 8/1/34

    115        111,356   

Larkspur-Corte Madera School District, (Election of 2011), 4.25%, 8/1/36

    95        93,090   

Palo Alto, (Election of 2008), 5.00%, 8/1/40

    1,850        1,956,190   

San Bernardino Community College District, 4.00%, 8/1/30

    1,510        1,424,881   

San Diego Community College District, (Election of 2002), 5.00%, 8/1/32

    720        774,000   

San Diego Community College District, (Election of 2006), 5.00%, 8/1/31

    455        491,040   

San Jose-Evergreen Community College District, (Election of 2010), 5.00%, 8/1/33

    350        377,709   

San Jose-Evergreen Community College District, (Election of 2010), 5.00%, 8/1/35

    410        437,413   
                 
  $ 7,064,986   
                 

Hospital — 16.7%

               

California Health Facilities Financing Authority, (Catholic Healthcare West), 5.625%, 7/1/32

  $ 1,330      $ 1,361,268   

California Health Facilities Financing Authority, (Cedars-Sinai Medical Center), 5.00%, 8/15/39

    1,400        1,415,176   

California Health Facilities Financing Authority, (City of Hope), 5.00%, 11/15/32

    335        341,995   

California Health Facilities Financing Authority, (City of Hope), 5.00%, 11/15/35

    475        478,610   

California Health Facilities Financing Authority, (Memorial Health Services), 5.00%, 10/1/27

    750        803,887   

California Health Facilities Financing Authority, (St. Joseph Health System), 5.00%, 7/1/33

    600        616,272   

California Health Facilities Financing Authority, (St. Joseph Health System), 5.00%, 7/1/37

    280        283,212   

California Statewide Communities Development Authority, (Cottage Health System), 5.25%, 11/1/30

    1,000        1,047,820   

Washington Township Health Care District, 5.00%, 7/1/32

    555        538,850   

Washington Township Health Care District, 5.25%, 7/1/29

    750        750,840   
                 
  $ 7,637,930   
                 

Insured – Education — 7.6%

               

California Educational Facilities Authority, (Pepperdine University), (AMBAC), 5.00%, 12/1/32

  $ 420      $ 438,715   

California Educational Facilities Authority, (Pepperdine University), (AMBAC), 5.00%, 12/1/35

    1,000        1,028,960   

California State University, (AGM), (BHAC), 5.00%, 11/1/39(1)

    2,000        2,025,720   
                 
  $ 3,493,395   
                 
 

 

  17   See Notes to Financial Statements.


Eaton Vance

California Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Electric Utilities — 7.7%

               

Los Angeles Department of Water and Power, Electric System Revenue, (AMBAC), (BHAC), 5.00%, 7/1/26(1)

  $ 1,500      $ 1,647,150   

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/34

    1,035        794,425   

Sacramento Municipal Utility District, (AGM), 5.00%, 8/15/27

    1,000        1,072,860   
                 
  $ 3,514,435   
                 

Insured – Escrowed / Prerefunded — 12.5%

  

California Infrastructure and Economic Development Bank, (Bay Area Toll Bridges), (AMBAC), Prerefunded to 1/1/28, 5.00%, 7/1/33

  $ 1,150      $ 1,362,865   

California Infrastructure and Economic Development Bank, (Bay Area Toll Bridges), (AMBAC), Prerefunded to 1/1/28, 5.00%, 7/1/36

    1,025        1,214,728   

Clovis Unified School District, (NPFG), Escrowed to Maturity, 0.00%, 8/1/20

    3,130        2,693,177   

Orange County Water District, Certificates of Participation, (NPFG), Escrowed to Maturity, 5.00%, 8/15/34

    395        432,193   
                 
  $ 5,702,963   
                 

Insured – General Obligations — 26.4%

               

Antelope Valley Community College District, (Election of 2004), (NPFG), 5.25%, 8/1/39

  $ 725      $ 768,217   

Arcadia Unified School District, (Election of 2006), (AGM), 0.00%, 8/1/38

    7,125        1,774,552   

Arcadia Unified School District, (Election of 2006), (AGM), 0.00%, 8/1/40

    2,525        526,791   

Carlsbad Unified School District, (Election of 2006), (NPFG), 5.25%, 8/1/32

    1,500        1,607,820   

Coast Community College District, (Election of 2002), (AGM), 0.00%, 8/1/35

    6,675        2,080,397   

El Camino Hospital District, (NPFG), 4.45%, 8/1/36

    575        564,288   

Palm Springs Unified School District, (Election of 2008), (AGC), 5.00%, 8/1/33

    1,250        1,296,625   

Riverside Community College District, (Election of 2004), (AGM), (NPFG), 5.00%, 8/1/32

    1,040        1,090,430   

Union Elementary School District, (Election of 1999), (NPFG), 0.00%, 9/1/22

    3,200        2,348,224   
                 
  $ 12,057,344   
                 

Insured – Hospital — 6.6%

  

California Statewide Communities Development Authority, (Kaiser Permanente), (BHAC),
5.00%, 3/1/41(1)

  $ 1,250      $ 1,254,750   

California Statewide Communities Development Authority, (Sutter Health), (AGM), 5.05%, 8/15/38(1)

    1,750        1,759,660   
                 
  $ 3,014,410   
                 
Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Lease Revenue / Certificates of Participation — 7.3%

  

Puerto Rico Public Finance Corp., (AMBAC), Escrowed to Maturity, 5.50%, 8/1/27

  $ 1,250      $ 1,503,812   

San Diego County Water Authority, Certificates of Participation, (AGM), 5.00%, 5/1/38(1)

    1,750        1,822,975   
                 
  $ 3,326,787   
                 

Insured – Special Tax Revenue — 9.4%

               

Cathedral City Public Financing Authority, (Housing Redevelopment), (NPFG), 5.00%, 8/1/33

  $ 1,400      $ 1,355,410   

Hesperia Public Financing Authority, (Redevelopment and Housing Projects), (XLCA), 5.00%, 9/1/37

    1,535        1,313,592   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    2,675        338,441   

Santa Clara Valley Transportation Authority, Sales Tax Revenue, (AMBAC), 5.00%, 4/1/32

    1,225        1,302,616   
                 
  $ 4,310,059   
                 

Insured – Transportation — 4.1%

               

San Joaquin Hills Transportation Corridor Agency, (NPFG), 0.00%, 1/15/27

  $ 3,520      $ 1,561,437   

San Jose, Airport Revenue, (AMBAC), 5.00%, 3/1/33

    330        332,768   
                 
  $ 1,894,205   
                 

Insured – Water and Sewer — 9.1%

               

Calleguas Las Virgines Public Financing Authority, (Municipal Water District), (BHAC), (FGIC), 4.75%, 7/1/37

  $ 1,235      $ 1,259,169   

East Bay Municipal Utility District, Water System Revenue, (AGM), (FGIC), 5.00%, 6/1/32

    100        106,370   

East Bay Municipal Utility District, Water System Revenue, (NPFG), 5.00%, 6/1/32(1)

    1,600        1,701,920   

Riverside, Water System Revenue, (AGM), 5.00%, 10/1/38

    445        462,457   

Santa Clara Valley Water District, (AGM), 3.75%, 6/1/28

    615        617,774   
                 
  $ 4,147,690   
                 

Special Tax Revenue — 6.5%

               

Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue, 5.00%, 7/1/31

  $ 1,490      $ 1,572,963   

San Francisco Bay Area Rapid Transit District, Sales Tax Revenue, 5.00%, 7/1/28

    1,300        1,417,936   
                 
  $ 2,990,899   
                 

Transportation — 13.6%

               

Bay Area Toll Authority, Toll Bridge Revenue, (San Francisco Bay Area), 5.25%, 4/1/29

  $ 1,190      $ 1,333,217   

Long Beach, Harbor Revenue, 5.00%, 5/15/27

    540        589,594   
 

 

  18   See Notes to Financial Statements.


Eaton Vance

California Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Transportation (continued)

               

Los Angeles Department of Airports, (Los Angeles International Airport), 5.00%, 5/15/35(1)(2)

  $ 1,060      $ 1,104,191   

Los Angeles Harbor Department, 5.00%, 8/1/25

    1,250        1,404,575   

San Francisco City and County Airport Commission, (San Francisco International Airport), 5.00%, 5/1/35

    635        650,354   

San Jose, Airport Revenue, 5.00%, 3/1/20

    1,000        1,154,160   
                 
  $ 6,236,091   
                 

Water and Sewer — 2.4%

  

Metropolitan Water District of Southern California, 5.00%, 1/1/39

  $ 1,050      $ 1,108,968   
                 
  $ 1,108,968   
                 

Total Tax-Exempt Investments — 171.3%
(identified cost $76,267,295)

    $ 78,320,636   
                 

Auction Preferred Shares Plus Cumulative Unpaid Dividends — (56.2)%

  

  $ (25,700,403
                 

Other Assets, Less Liabilities — (15.1)%

  

  $ (6,887,861
                 

Net Assets Applicable to Common Shares — 100.0%

  

  $ 45,732,372   
                 

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
BHAC     Berkshire Hathaway Assurance Corp.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.
XLCA     XL Capital Assurance, Inc.

The Fund invests primarily in debt securities issued by California municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 52.9% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 1.7% to 19.5% of total investments.

 

(1) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

(2) 

Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $309,191.

 

 

  19   See Notes to Financial Statements.


Eaton Vance

Massachusetts Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Investments — 165.8%    
   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Bond Bank — 5.8%

  

Massachusetts Water Pollution Abatement Trust, 5.25%, 8/1/33

  $ 585      $ 670,083   

Massachusetts Water Pollution Abatement Trust, 5.25%, 8/1/34

    640        731,219   
                 
    $ 1,401,302   
                 

Education — 32.7%

  

Massachusetts Development Finance Agency, (Middlesex School), 5.00%, 9/1/33

  $ 750      $ 751,500   

Massachusetts Development Finance Agency, (Milton Academy), 5.00%, 9/1/35

    750        787,515   

Massachusetts Health and Educational Facilities Authority, (Harvard University), 5.00%, 10/1/38(1)

    2,000        2,102,060   

Massachusetts Health and Educational Facilities Authority, (Massachusetts Institute of Technology), 5.50%, 7/1/36

    1,000        1,105,960   

Massachusetts Health and Educational Facilities Authority, (Northeastern University), 5.00%, 10/1/35

    870        892,202   

Massachusetts Health and Educational Facilities Authority, (Tufts University), 5.375%, 8/15/38

    1,025        1,134,060   

University of Massachusetts Building Authority, 5.00%, 11/1/39

    1,000        1,046,030   
                 
    $ 7,819,327   
                 

General Obligations — 12.9%

  

Boston, 4.00%, 4/1/24

  $ 200      $ 217,482   

Cambridge, 4.00%, 2/15/21

    395        446,172   

Danvers, 5.25%, 7/1/36

    565        609,302   

Plymouth, 5.00%, 5/1/26

    250        277,782   

Plymouth, 5.00%, 5/1/31

    225        241,875   

Plymouth, 5.00%, 5/1/32

    205        219,262   

Wayland, 5.00%, 2/1/33

    340        367,247   

Wayland, 5.00%, 2/1/36

    510        544,461   

Winchester, 5.00%, 4/15/36

    160        171,077   
                 
    $ 3,094,660   
                 

Hospital — 16.2%

  

Massachusetts Health and Educational Facilities Authority, (Dana-Farber Cancer Institute), 5.00%, 12/1/37

  $ 775      $ 785,331   

Massachusetts Health and Educational Facilities Authority, (Lahey Clinic Medical Center), 5.25%, 8/15/28

    400        415,800   

Massachusetts Health and Educational Facilities Authority, (Partners Healthcare System), 5.00%, 7/1/34

    500        513,790   

Massachusetts Health and Educational Facilities Authority, (Partners Healthcare System), 5.00%, 7/1/39

    750        762,307   

Massachusetts Health and Educational Facilities Authority, (South Shore Hospital), 5.75%, 7/1/29

    370        371,214   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Hospital (continued)

  

Massachusetts Health and Educational Facilities Authority, (Southcoast Health System), 5.00%, 7/1/29

  $ 1,000      $ 1,018,180   
                 
    $ 3,866,622   
                 

Insured – Education — 18.6%

  

Massachusetts College Building Authority, (XLCA), 5.50%, 5/1/39

  $ 700      $ 793,807   

Massachusetts Development Finance Agency, (Boston College), (NPFG), 5.00%, 7/1/38

    750        775,635   

Massachusetts Development Finance Agency, (Boston University), (XLCA), 6.00%, 5/15/59

    1,105        1,230,329   

Massachusetts Development Finance Agency, (College of the Holy Cross), (AMBAC), 5.25%, 9/1/32(1)(2)

    750        837,952   

Massachusetts Development Finance Agency, (Massachusetts College of Pharmacy), (AGC), 5.00%, 7/1/35

    750        809,438   
                 
    $ 4,447,161   
                 

Insured – Electric Utilities — 4.0%

  

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/23

  $ 1,095      $ 949,880   
                 
    $ 949,880   
                 

Insured – Escrowed / Prerefunded — 7.8%

  

Massachusetts College Building Authority, (NPFG), Escrowed to Maturity, 0.00%, 5/1/26

  $ 2,900      $ 1,878,562   
                 
    $ 1,878,562   
                 

Insured – General Obligations — 13.9%

  

Massachusetts, (AMBAC), 5.50%, 8/1/30

  $ 1,900      $ 2,302,876   

Revere, (AGC), 5.00%, 4/1/39

    1,000        1,016,820   
                 
    $ 3,319,696   
                 

Insured – Hospital — 1.0%

  

Massachusetts Health and Educational Facilities Authority, (Cape Cod Healthcare), (AGC), 5.00%, 11/15/25

  $ 220      $ 232,115   
                 
    $ 232,115   
                 

Insured – Lease Revenue / Certificates of Participation — 5.0%

  

Puerto Rico Public Finance Corp., (AMBAC), Escrowed to Maturity, 5.50%, 8/1/27

  $ 1,000      $ 1,203,050   
                 
    $ 1,203,050   
                 
 

 

  20   See Notes to Financial Statements.


Eaton Vance

Massachusetts Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Other Revenue — 1.9%

  

Massachusetts Development Finance Agency, (WGBH Educational Foundation), (AMBAC), 5.75%, 1/1/42

  $ 415      $ 455,504   
                 
    $ 455,504   
                 

Insured – Special Tax Revenue — 16.1%

  

Martha’s Vineyard Land Bank, (AMBAC), 5.00%, 5/1/32

  $ 1,225      $ 1,228,320   

Massachusetts Bay Transportation Authority, Sales Tax Revenue, (NPFG), 5.50%, 7/1/28

    400        470,516   

Massachusetts School Building Authority, Dedicated Sales Tax Revenue, (AMBAC), 5.00%, 8/15/37(1)

    1,160        1,204,034   

Massachusetts, Special Obligation, Dedicated Tax Revenue, (NPFG), 5.50%, 1/1/29

    750        858,030   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    770        97,420   
                 
    $ 3,858,320   
                 

Insured – Water and Sewer — 4.5%

  

Massachusetts Water Resources Authority, (AGM), 5.25%, 8/1/36

  $ 960      $ 1,078,982   
                 
    $ 1,078,982   
                 

Other Revenue — 3.7%

               

Massachusetts Health and Educational Facilities Authority, (Isabella Stewart Gardner Museum), 5.00%, 5/1/25

  $ 320      $ 355,395   

Massachusetts Health and Educational Facilities Authority, (Isabella Stewart Gardner Museum), 5.00%, 5/1/29

    490        521,385   
                 
    $ 876,780   
                 

Senior Living / Life Care — 2.9%

               

Massachusetts Development Finance Agency, (Berkshire Retirement Community, Inc.), 5.15%, 7/1/31

  $ 745      $ 683,880   
                 
    $ 683,880   
                 

Special Tax Revenue — 5.8%

               

Massachusetts Bay Transportation Authority, 5.25%, 7/1/34

  $ 95      $ 103,322   

Massachusetts Bay Transportation Authority, Special Tax Revenue, 5.00%, 7/1/35

    1,210        1,285,323   
                 
    $ 1,388,645   
                 

Transportation — 9.5%

               

Massachusetts Department of Transportation, (Metropolitan Highway System), 5.00%, 1/1/32

  $ 1,000      $ 1,036,290   

Massachusetts Department of Transportation, (Metropolitan Highway System), 5.00%, 1/1/37

    500        511,270   

Massachusetts Port Authority, 5.00%, 7/1/28

    250        274,305   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Transportation (continued)

               

Massachusetts Port Authority, 5.00%, 7/1/34

  $ 435      $ 456,476   
                 
    $ 2,278,341   
                 

Water and Sewer — 3.5%

  

Boston Water & Sewer Commission, 5.00%, 11/1/27

  $ 750      $ 834,765   
                 
    $ 834,765   
                 

Total Tax-Exempt Investments — 165.8%
(identified cost $37,973,295)

    $ 39,667,592   
                 

Auction Preferred Shares Plus Cumulative Unpaid Dividends — (56.7)%

    $ (13,575,171
                 

Other Assets, Less Liabilities — (9.1)%

    $ (2,167,402
                 

Net Assets Applicable to Common Shares — 100.0%

    $ 23,925,019   
                 

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.
XLCA     XL Capital Assurance, Inc.

The Fund invests primarily in debt securities issued by Massachusetts municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 43.9% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 2.7% to 18.2% of total investments.

 

(1) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

(2) 

Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $337,953.

 

 

  21   See Notes to Financial Statements.


Eaton Vance

Michigan Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Investments — 165.2%   
   
Security   Principal
Amount
(000’s omitted)
    Value  

Education — 6.3%

  

Michigan Higher Education Facilities Authority, (Hillsdale College), 5.00%, 3/1/35

  $ 250      $ 250,015   

Michigan Technological University, 4.00%, 10/1/36

    570        502,558   

Wayne State University, 5.00%, 11/15/40

    500        508,320   
   
    $ 1,260,893   
   

Electric Utilities — 3.5%

  

Michigan Public Power Agency, 5.00%, 1/1/43

  $ 700      $ 686,238   
   
    $ 686,238   
   

Escrowed / Prerefunded — 2.2%

  

Michigan Hospital Finance Authority, (Chelsea Community Hospital), Prerefunded to 5/15/15, 5.00%, 5/15/30

  $ 400      $ 429,860   
   
    $ 429,860   
   

General Obligations — 36.5%

  

Birmingham Public Schools, 4.00%, 5/1/32

  $ 1,000      $ 978,130   

Bloomfield Hills Schools, 4.00%, 5/1/37

    500        473,625   

Buchanan Community Schools, 4.00%, 5/1/31

    500        471,575   

Chippewa Valley Schools, 5.00%, 5/1/31

    750        784,260   

Comstock Park Public Schools, 5.00%, 5/1/28

    170        178,976   

Comstock Park Public Schools, 5.125%, 5/1/31

    205        213,016   

Comstock Park Public Schools, 5.25%, 5/1/33

    165        171,796   

HealthSource Saginaw, Inc., Saginaw County, 4.00%, 5/1/29

    500        477,595   

Howell Public Schools, 4.50%, 5/1/29

    620        627,471   

Livingston County, 4.00%, 6/1/28

    230        228,728   

Livingston County, 4.00%, 6/1/30

    225        219,634   

Northview Public Schools, 5.00%, 5/1/41

    895        904,299   

Plymouth-Canton Community Schools, 4.00%, 5/1/33

    750        691,492   

St. Clair County, (Convention Center), 3.75%, 4/1/42

    375        298,238   

Whitmore Lake Public School District, 4.00%, 5/1/32

    600        559,596   
   
    $ 7,278,431   
   

Hospital — 19.9%

  

Grand Traverse Hospital, 5.375%, 7/1/35

  $ 750      $ 773,422   

Kalamazoo Hospital Finance Authority, (Bronson Health Care Group), 5.25%, 5/15/33

    500        508,925   

Kent Hospital Finance Authority, (Spectrum Health System), 5.00%, 1/15/31

    750        766,800   

Michigan Finance Authority, (Oakwood Obligated Group), 5.00%, 11/1/32

    500        496,635   
   
Security   Principal
Amount
(000’s omitted)
    Value  

Hospital (continued)

  

Michigan Hospital Finance Authority, (McLaren Health Care), 5.00%, 6/1/35

  $ 750      $ 742,118   

Michigan Hospital Finance Authority, (Trinity Health Corp.), 5.00%, 12/1/48

    700        683,270   
   
    $ 3,971,170   
   

Insured – Education — 2.3%

  

Ferris State University, (AGC), 5.125%, 10/1/33

  $ 435      $ 450,229   
   
    $ 450,229   
   

Insured – Electric Utilities — 2.5%

  

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/26

  $ 610      $ 502,646   
   
    $ 502,646   
   

Insured – Escrowed / Prerefunded — 29.0%

  

Michigan Hospital Finance Authority, (St. John Health System), (AMBAC), Escrowed to Maturity, 5.00%, 5/15/28

  $ 1,150      $ 1,154,198   

Michigan House of Representatives, (AMBAC), Escrowed to Maturity, 0.00%, 8/15/22

    1,750        1,359,610   

Michigan House of Representatives, (AMBAC), Escrowed to Maturity, 0.00%, 8/15/23

    2,615        1,936,355   

Reed City Public Schools, (AGM), Prerefunded to 5/1/14, 5.00%, 5/1/29

    1,300        1,336,829   
   
    $ 5,786,992   
   

Insured – General Obligations — 29.9%

  

Battle Creek, (BAM), 5.00%, 6/1/33

  $ 500      $ 503,900   

Brownfield Redevelopment Authority, (BAM), 5.375%, 10/1/38(2)

    500        506,560   

Greenville Public Schools, (NPFG), 5.00%, 5/1/25

    375        376,103   

Livonia Public Schools School District, (AGM), 5.00%, 5/1/43

    750        747,667   

Okemos Public School District, (NPFG), 0.00%, 5/1/19(1)

    1,330        1,150,689   

Pinconning Area Schools, (AGM), 5.00%, 5/1/33

    1,000        1,018,500   

Royal Oak, (AGC), 6.25%, 10/1/28

    1,000        1,147,430   

Westland Tax Increment Finance Authority, (BAM), 5.25%, 4/1/34

    500        502,225   
   
    $ 5,953,074   
   

Insured – Lease Revenue / Certificates of Participation — 8.4%

  

Michigan Building Authority, (AGM), (FGIC), 0.00%, 10/15/29

  $ 1,000      $ 426,320   

Michigan Building Authority, (NPFG), 0.00%, 10/15/30

    3,100        1,246,138   
   
    $ 1,672,458   
   
 

 

  22   See Notes to Financial Statements.


Eaton Vance

Michigan Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  

Insured – Special Tax Revenue — 0.4%

  

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

  $ 615      $ 77,810   
   
    $ 77,810   
   

Insured – Water and Sewer — 12.0%

  

Detroit Water Supply System, (NPFG), 5.00%, 7/1/30

  $ 1,425      $ 1,323,939   

Grand Rapids Water Supply System, (AGC), 5.00%, 1/1/29

    1,000        1,067,390   
   
    $ 2,391,329   
   

Special Tax Revenue — 5.2%

  

Michigan Trunk Line Fund, 5.00%, 11/15/36

  $ 1,000      $ 1,044,040   
   
    $ 1,044,040   
   

Transportation — 2.5%

  

Wayne County Airport Authority, 5.00%, 12/1/31

  $ 500      $ 498,780   
   
    $ 498,780   
   

Water and Sewer — 4.6%

  

Grand Rapids, Sanitary Sewer System, 5.00%, 1/1/28

  $ 605      $ 668,815   

Port Huron, Water Supply System, 5.25%, 10/1/31

    250        256,568   
   
    $ 925,383   
   

Total Tax – Exempt Investments — 165.2%
(identified cost $32,923,895)

   

  $ 32,929,333   
   

Auction Preferred Shares Plus Cumulative
Unpaid Dividends — (66.8)%

   

  $ (13,325,251
   

Other Assets, Less Liabilities — 1.6%

  

  $ 327,123   
   

Net Assets Applicable to Common Shares — 100.0%

  

  $ 19,931,205   
   

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
BAM     Build America Mutual Assurance Co.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.

The Fund invests primarily in debt securities issued by Michigan municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 51.1% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 1.3% to 14.2% of total investments.

 

(1) 

Security (or a portion thereof) has been segregated to cover payable for when-issued securities.

 

(2) 

When-issued security.

 

 

  23   See Notes to Financial Statements.


Eaton Vance

New Jersey Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Municipal Securities — 152.9%   
   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Education — 7.9%

  

New Jersey Educational Facilities Authority, (Georgian Court University), 5.25%, 7/1/37

  $ 750      $ 752,213   

New Jersey Educational Facilities Authority, (Princeton University), 5.00%, 7/1/29

    500        562,435   

New Jersey Educational Facilities Authority, (Ramapo College), 5.00%, 7/1/37

    360        371,041   

New Jersey Institute of Technology, 5.00%, 7/1/42

    735        754,867   

Rutgers State University, 5.00%, 5/1/39

    250        262,230   
                 
    $ 2,702,786   
                 

General Obligations — 4.5%

  

Monmouth County Improvement Authority, 5.00%, 1/15/27

  $ 1,375      $ 1,532,795   
                 
    $ 1,532,795   
                 

Hospital — 12.8%

  

Camden County Improvement Authority, (Cooper Health System), 5.00%, 2/15/35

  $ 175      $ 162,305   

Camden County Improvement Authority, (Cooper Health System), 5.75%, 2/15/34

    685        687,117   

Camden County Improvement Authority, (Cooper Health System), 5.75%, 2/15/42

    250        248,422   

New Jersey Health Care Facilities Financing Authority, (Atlanticare Regional Medical Center), 5.00%, 7/1/37

    515        525,460   

New Jersey Health Care Facilities Financing Authority, (Hunterdon Medical Center), 5.125%, 7/1/35

    250        250,935   

New Jersey Health Care Facilities Financing Authority, (Meridian Health System), 5.00%, 7/1/21

    255        288,344   

New Jersey Health Care Facilities Financing Authority, (Meridian Health System), 5.00%, 7/1/26

    145        154,125   

New Jersey Health Care Facilities Financing Authority, (Palisades Medical Center), 5.25%, 7/1/31

    750        728,437   

New Jersey Health Care Facilities Financing Authority, (South Jersey Hospital), 5.00%, 7/1/46

    1,345        1,337,374   
                 
    $ 4,382,519   
                 

Housing — 2.9%

  

New Jersey Housing and Mortgage Finance Agency, (Single Family Housing), 4.375%, 4/1/28

  $ 965      $ 980,315   
                 
    $ 980,315   
                 

Insured – Education — 6.6%

  

New Jersey Educational Facilities Authority, (Rowan University), (AGM), (FGIC), 3.00%, 7/1/27

  $ 920      $ 835,231   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Education (continued)

  

New Jersey Educational Facilities Authority, (William Paterson University), (AGC), 4.75%, 7/1/34

  $ 1,145      $ 1,166,366   

New Jersey Educational Facilities Authority, (William Paterson University), (AGC), 5.00%, 7/1/38

    275        276,710   
                 
    $ 2,278,307   
                 

Insured – Electric Utilities — 2.2%

  

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/26

  $ 615      $ 506,766   

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/35

    335        258,258   
                 
    $ 765,024   
                 

Insured – General Obligations — 44.0%

  

Bayonne, (AGM), 0.00%, 7/1/23

  $ 2,415      $ 1,676,976   

Bayonne, (AGM), 5.50%, 7/1/39

    1,000        1,049,600   

Delaware Township, Hunterdon County, (AGC), 5.00%, 10/15/35

    320        336,413   

Delaware Township, Hunterdon County, (AGC), 5.10%, 10/15/36

    340        358,442   

Delaware Township, Hunterdon County, (AGC), 5.15%, 10/15/37

    360        380,477   

Delaware Township, Hunterdon County, (AGC), 5.20%, 10/15/38

    382        404,022   

Hudson County Improvement Authority, (Harrison Parking), (AGC), 5.25%, 1/1/39

    1,500        1,561,965   

Hudson County Improvement Authority, (Harrison Redevelopment), (NPFG), 0.00%, 12/15/38

    2,000        538,960   

Irvington Township, (AGM), 0.00%, 7/15/26

    5,235        3,037,033   

Jackson Township School District, (NPFG), 2.50%, 6/15/27

    2,370        2,064,175   

Jersey City, (AGM), 5.00%, 1/15/29

    1,000        1,047,210   

Lakewood Township, (AGC), 5.75%, 11/1/31

    700        765,380   

Monroe Township Board of Education, Middlesex County, (AGC), 4.75%, 3/1/34

    1,015        1,035,625   

Nutley School District, (NPFG), 4.75%, 7/15/30

    110        114,006   

Nutley School District, (NPFG), 4.75%, 7/15/31

    410        424,051   

Paterson, (BAM), 5.00%, 1/15/26

    250        271,202   
                 
    $ 15,065,537   
                 

Insured – Hospital — 11.8%

  

New Jersey Health Care Facilities Financing Authority, (Hackensack University Medical Center), (AGC), 5.25%, 1/1/36

  $ 2,000      $ 2,060,680   

New Jersey Health Care Facilities Financing Authority, (Meridian Health System), Series II, (AGC), 5.00%, 7/1/38

    170        172,463   

New Jersey Health Care Facilities Financing Authority, (Meridian Health System), Series V, (AGC), 5.00%, 7/1/38(1)

    250        253,623   

New Jersey Health Care Facilities Financing Authority, (Virtua Health), (AGC), 5.50%, 7/1/38

    1,500        1,545,660   
                 
    $ 4,032,426   
                 
 

 

  24   See Notes to Financial Statements.


Eaton Vance

New Jersey Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Lease Revenue / Certificates of Participation — 13.6%

  

Essex County Improvement Authority, (NPFG), 5.50%, 10/1/30

  $ 1,000      $ 1,151,560   

New Jersey Economic Development Authority, (School Facilities Construction), (AGC), 5.50%, 12/15/34

    1,300        1,416,597   

New Jersey Economic Development Authority, (School Facilities Construction), (NPFG), 5.50%, 9/1/28

    500        572,700   

Puerto Rico Public Finance Corp., (AMBAC), Escrowed to Maturity, 5.50%, 8/1/27

    1,250        1,503,812   
                 
    $ 4,644,669   
                 

Insured – Special Tax Revenue — 12.9%

  

Garden State Preservation Trust, (AGM), 0.00%, 11/1/21

  $ 1,000      $ 774,090   

Garden State Preservation Trust, (AGM), Prerefunded to 11/1/15, 5.80%, 11/1/21

    500        554,900   

New Jersey Economic Development Authority, (Motor Vehicle Surcharges), (BHAC), (NPFG), 5.00%, 7/1/27

    975        996,830   

New Jersey Economic Development Authority, (Motor Vehicle Surcharges), (XLCA), 0.00%, 7/1/26

    2,380        1,344,296   

New Jersey Economic Development Authority, (Motor Vehicle Surcharges), (XLCA), 0.00%, 7/1/27

    1,120        594,014   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    1,105        139,805   
                 
  $ 4,403,935   
                 

Insured – Transportation — 7.8%

  

New Jersey Turnpike Authority, (AGM), (BHAC), 5.25%, 1/1/29

  $ 1,500      $ 1,704,150   

Port Authority of New York and New Jersey, (AGM), 5.00%, 8/15/33

    720        761,897   

South Jersey Transportation Authority, (AGC), 5.50%, 11/1/33

    180        193,444   
                 
  $ 2,659,491   
                 

Insured – Water and Sewer — 9.5%

  

Middlesex County Improvement Authority, (Perth Amboy), (AMBAC), 0.00%, 9/1/24

  $ 4,500      $ 2,817,765   

Passaic Valley Sewerage Commissioners, (NPFG), 2.50%, 12/1/32

    635        436,982   
                 
  $ 3,254,747   
                 

Lease Revenue / Certificates of Participation — 1.8%

  

New Jersey Health Care Facilities Financing Authority, (Hospital Asset Transformation Program), 5.25%, 10/1/38

  $ 600      $ 610,284   
                 
  $ 610,284   
                 

Senior Living / Life Care — 1.4%

  

New Jersey Economic Development Authority, (United Methodist Homes of New Jersey), 5.00%, 7/1/34

  $ 500      $ 476,680   
                 
  $ 476,680   
                 
Security   Principal
Amount
(000’s omitted)
    Value  
   

Student Loan — 3.0%

  

New Jersey Higher Education Student Assistance Authority, 5.625%, 6/1/30

  $ 965      $ 1,023,189   
                 
  $ 1,023,189   
                 

Transportation — 8.0%

  

Delaware River Port Authority of Pennsylvania and New Jersey, 5.00%, 1/1/35

  $ 590      $ 613,706   

Delaware River Port Authority of Pennsylvania and New Jersey, 5.00%, 1/1/40

    210        216,115   

New Jersey Transportation Trust Fund Authority, (Transportation Program), 5.25%, 6/15/30

    610        658,575   

New Jersey Transportation Trust Fund Authority, (Transportation System), 5.50%, 6/15/31

    1,150        1,249,866   
                 
  $ 2,738,262   
                 

Water and Sewer — 2.2%

  

North Hudson Sewerage Authority, 5.00%, 6/1/29

  $ 725      $ 763,503   
                 
  $ 763,503   
                 

Total Tax-Exempt Municipal Securities — 152.9%
(identified cost $49,987,814)

   

  $ 52,314,469   
                 
Taxable Municipal Securities — 1.2%   
   
Security   Principal
Amount
(000’s omitted)
    Value  

Transportation — 1.2%

  

Port Authority of New York and New Jersey, 4.458%, 10/1/62

  $ 500      $ 423,580   
                 

Total Taxable Municipal Securities — 1.2%
(identified cost $494,527)

   

  $ 423,580   
                 

Total Investments — 154.1%
(identified cost $50,482,341)

   

  $ 52,738,049   
                 

Auction Preferred Shares Plus Cumulative Unpaid
Dividends — (57.3)%

   

  $ (19,600,431
                 

Other Assets, Less Liabilities — 3.2%

  

  $ 1,083,181   
                 

Net Assets Applicable to Common Shares — 100.0%

  

  $ 34,220,799   
                 

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

 

  25   See Notes to Financial Statements.


Eaton Vance

New Jersey Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
BAM     Build America Mutual Assurance Co.
BHAC     Berkshire Hathaway Assurance Corp.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.
XLCA     XL Capital Assurance, Inc.

The Fund invests primarily in debt securities issued by New Jersey municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 70.4% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 0.5% to 22.6% of total investments.

 

(1) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

 

  26   See Notes to Financial Statements.


Eaton Vance

New York Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Investments — 162.3%   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Bond Bank — 2.5%

  

New York Environmental Facilities Corp., 5.00%, 10/15/39

  $ 750      $ 791,453   
                 
    $ 791,453   
                 

Education — 22.1%

  

Geneva Development Corp., (Hobart and William Smith Colleges), 5.00%, 9/1/32

  $ 605      $ 636,079   

Monroe County Industrial Development Corp., (St. John Fisher College), 5.00%, 6/1/23

    60        65,831   

Monroe County Industrial Development Corp., (St. John Fisher College), 5.00%, 6/1/24

    35        37,721   

Monroe County Industrial Development Corp., (St. John Fisher College), 5.00%, 6/1/25

    25        26,552   

New York City Industrial Development Agency, (St. Francis College), 5.00%, 10/1/34

    350        351,477   

New York Dormitory Authority, (Columbia University), 5.00%, 10/1/41

    1,275        1,354,394   

New York Dormitory Authority, (Cornell University), 5.00%, 7/1/37(1)

    1,275        1,358,104   

New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/34

    565        608,505   

New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/40

    610        643,275   

New York Dormitory Authority, (Skidmore College), 5.00%, 7/1/28

    325        347,578   

New York Dormitory Authority, (The New School), 5.50%, 7/1/40

    1,000        1,041,640   

Onondaga County Cultural Resources Trust, (Syracuse University), 5.00%, 12/1/38

    515        537,506   
                 
    $ 7,008,662   
                 

Electric Utilities — 1.4%

  

Puerto Rico Electric Power Authority, 5.25%, 7/1/31

  $ 580      $ 435,435   
                 
    $ 435,435   
                 

General Obligations — 11.5%

  

Arlington Central School District, 4.00%, 12/15/30

  $ 315      $ 317,646   

Long Beach City School District, 4.50%, 5/1/26

    770        818,972   

New York, 5.00%, 2/15/34(1)

    1,000        1,064,590   

New York City, 5.00%, 8/1/34(1)

    1,350        1,436,211   
                 
    $ 3,637,419   
                 

Hospital — 8.2%

  

New York Dormitory Authority, (Highland Hospital of Rochester), 5.00%, 7/1/26

  $ 135      $ 145,144   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Hospital (continued)

  

New York Dormitory Authority, (Highland Hospital of Rochester), 5.20%, 7/1/32

  $ 180      $ 185,195   

New York Dormitory Authority, (Memorial Sloan-Kettering Cancer Center), 4.375%, 7/1/34(1)

    500        501,175   

New York Dormitory Authority, (North Shore-Long Island Jewish Obligated Group), 5.00%, 5/1/20

    235        269,573   

New York Dormitory Authority, (North Shore-Long Island Jewish Obligated Group), 5.00%, 5/1/26

    335        346,249   

Suffolk County Economic Development Corp., (Catholic Health Services of Long Island Obligated Group), 5.00%, 7/1/28

    1,135        1,159,414   
                 
    $ 2,606,750   
                 

Housing — 1.3%

  

New York Mortgage Agency, 3.55%, 10/1/33

  $ 500      $ 419,780   
                 
    $ 419,780   
                 

Industrial Development Revenue — 1.3%

  

New York Liberty Development Corp., (Goldman Sachs Group, Inc.), 5.25%, 10/1/35

  $ 380      $ 403,077   
                 
    $ 403,077   
                 

Insured – Education — 26.6%

  

New York Dormitory Authority, (Barnard College), (NPFG), 5.00%, 7/1/24

  $ 1,440      $ 1,557,230   

New York Dormitory Authority, (Fordham University), (AGC), (BHAC), 5.00%, 7/1/38(1)

    2,250        2,278,283   

New York Dormitory Authority, (Pratt Institute), (AGC), 5.00%, 7/1/34

    345        359,131   

New York Dormitory Authority, (Pratt Institute), (AGC), 5.125%, 7/1/39

    545        564,571   

New York Dormitory Authority, (Skidmore College), (NPFG), 5.00%, 7/1/33

    500        502,995   

New York Dormitory Authority, (St. John’s University), (NPFG), 5.25%, 7/1/37

    850        862,053   

Oneida County Industrial Development Agency, (Hamilton College), (NPFG), 0.00%, 7/1/32

    5,425        2,332,370   
                 
    $ 8,456,633   
                 

Insured – Electric Utilities — 3.5%

  

Long Island Power Authority, Electric System Revenue, (BHAC), 5.50%, 5/1/33

  $ 500      $ 550,940   

Long Island Power Authority, Electric System Revenue, (BHAC), 6.00%, 5/1/33

    500        569,805   
                 
    $ 1,120,745   
                 
 

 

  27   See Notes to Financial Statements.


Eaton Vance

New York Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Escrowed / Prerefunded — 3.0%

  

New York City, (AGM), Prerefunded to 4/1/16, 5.00%, 4/1/22

  $ 855      $ 950,119   
                 
    $ 950,119   
                 

Insured – General Obligations — 12.5%

  

Brentwood Union Free School District, (AGC), 4.75%, 11/15/23

  $ 535      $ 599,489   

Brentwood Union Free School District, (AGC), 5.00%, 11/15/24

    560        630,062   

Hauppauge Union Free School District, (AGC), 4.00%, 7/15/24

    250        264,495   

Hoosic Valley Central School District, (AGC), 4.00%, 6/15/23

    250        266,313   

Longwood Central School District, Suffolk County, (AGC), 4.15%, 6/1/23

    185        196,342   

Longwood Central School District, Suffolk County, (AGC), 4.25%, 6/1/24

    190        201,206   

New York City, (AGM), 5.00%, 4/1/22

    145        158,194   

Sachem Central School District, (NPFG), 4.25%, 10/15/28

    410        415,715   

Wantagh Union Free School District, (AGC), 4.50%, 11/15/19

    185        206,510   

Wantagh Union Free School District, (AGC), 4.50%, 11/15/20

    190        209,448   

Wantagh Union Free School District, (AGC), 4.75%, 11/15/22

    210        229,106   

Wantagh Union Free School District, (AGC), 4.75%, 11/15/23

    220        238,315   

William Floyd Union Free School District, (AGC), 4.00%, 12/15/24

    350        368,928   
                 
    $ 3,984,123   
                 

Insured – Hospital — 3.4%

  

New York City Health and Hospitals Corp., (AGM), 5.50%, 2/15/20

  $ 500      $ 570,195   

New York Dormitory Authority, (Hudson Valley Hospital Center), (AGM), (BHAC), 5.00%, 8/15/36

    500        507,335   
                 
    $ 1,077,530   
                 

Insured – Housing — 3.2%

  

New York City Housing Corp., (NPFG), 4.95%, 11/1/33

  $ 1,000      $ 1,003,570   
                 
    $ 1,003,570   
                 

Insured – Other Revenue — 9.7%

  

New York City Cultural Resources Trust, (American Museum of Natural History), (NPFG), 5.00%, 7/1/44

  $ 700      $ 700,077   

New York City Industrial Development Agency, (Yankee Stadium), (NPFG), 4.75%, 3/1/46

    1,390        1,342,851   

New York City Transitional Finance Authority, (BHAC), 5.50%, 7/15/38

    950        1,051,783   
                 
    $ 3,094,711   
                 
Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Special Tax Revenue — 7.0%

  

New York Thruway Authority, Miscellaneous Tax Revenue, (AMBAC), 5.50%, 4/1/20

  $ 510      $ 615,060   

Puerto Rico Infrastructure Financing Authority, (AMBAC), 0.00%, 7/1/35

    1,700        330,565   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    1,185        149,926   

Sales Tax Asset Receivables Corp., (AMBAC), 5.00%, 10/15/29

    385        399,599   

Sales Tax Asset Receivables Corp., (AMBAC), 5.00%, 10/15/32

    690        713,805   
                 
    $ 2,208,955   
                 

Insured – Transportation — 3.2%

  

Metropolitan Transportation Authority, (AGM), (NPFG), 5.00%, 11/15/31

  $ 1,000      $ 1,030,240   
                 
    $ 1,030,240   
                 

Insured – Water and Sewer — 4.3%

  

Nassau County Sewer and Storm Water Finance Authority, (BHAC), 5.375%, 11/1/28

  $ 905      $ 1,015,645   

Suffolk County Water Authority, (NPFG), 4.50%, 6/1/25

    350        357,312   
                 
    $ 1,372,957   
                 

Other Revenue — 7.5%

  

Brooklyn Arena Local Development Corp., (Barclays Center), 0.00%, 7/15/31

  $ 1,100      $ 397,749   

New York Liberty Development Corp., (7 World Trade Center), 5.00%, 9/15/32

    1,865        1,979,809   
                 
    $ 2,377,558   
                 

Special Tax Revenue — 15.1%

  

New York City Transitional Finance Authority, Future Tax Revenue, 5.50%, 11/1/35(1)(2)

  $ 500      $ 552,680   

New York Dormitory Authority, Personal Income Tax Revenue, 5.00%, 6/15/31(1)

    2,750        2,977,562   

New York Dormitory Authority, Personal Income Tax Revenue, 5.00%, 3/15/33

    650        688,539   

New York Thruway Authority, Miscellaneous Tax Revenue, 5.00%, 4/1/26

    530        581,129   
                 
    $ 4,799,910   
                 

Transportation — 15.0%

  

Metropolitan Transportation Authority, 5.00%, 11/15/34

  $ 2,000      $ 2,060,280   

Nassau County Bridge Authority, 5.00%, 10/1/35

    350        355,369   

Nassau County Bridge Authority, 5.00%, 10/1/40

    65        65,804   

New York Bridge Authority, 5.00%, 1/1/26

    205        230,303   

New York Thruway Authority, 5.00%, 1/1/37

    1,175        1,210,955   
 

 

  28   See Notes to Financial Statements.


Eaton Vance

New York Municipal Bond Fund II

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Transportation (continued)

  

Triborough Bridge and Tunnel Authority, 5.00%, 11/15/37

  $ 340      $ 347,154   

Triborough Bridge and Tunnel Authority, 5.00%, 11/15/38(1)

    500        511,075   
                 
    $ 4,780,940   
                 

Total Tax-Exempt Investments — 162.3%
(identified cost $50,277,476)

    $ 51,560,567   
                 

Auction Preferred Shares Plus Cumulative Unpaid
Dividends — (41.7)%

    $ (13,250,250
                 

Other Assets, Less Liabilities — (20.6)%

    $ (6,531,753
                 

Net Assets Applicable to Common Shares — 100.0%

    $ 31,778,564   
                 

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
BHAC     Berkshire Hathaway Assurance Corp.
NPFG     National Public Finance Guaranty Corp.

The Fund invests primarily in debt securities issued by New York municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 47.1% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 4.0% to 19.9% of total investments.

 

(1) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

(2) 

Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $177,680.

 

 

  29   See Notes to Financial Statements.


Eaton Vance

Ohio Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Investments — 154.6%   
   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Bond Bank — 12.1%

  

Cuyahoga County Port Authority, (Garfield Heights), 5.25%, 5/15/23

  $ 990      $ 917,572   

Ohio Economic Development, (Ohio Enterprise Bond Fund), 6.00%, 12/1/34

    700        758,331   

Ohio Water Development Authority, Water Pollution Control Loan Fund, (Water Quality), 5.00%, 6/1/30

    1,040        1,154,098   

Rickenbacker Port Authority, (OASBO Expanded Asset Pooled Financing Program), 5.375%, 1/1/32

    930        907,736   
   
    $ 3,737,737   
   

Education — 8.9%

  

Ohio Higher Educational Facility Commission, (Kenyon College), 5.00%, 7/1/44

  $ 305      $ 306,015   

Ohio Higher Educational Facility Commission, (Oberlin College), 5.00%, 10/1/33

    500        524,890   

Ohio State University, 5.00%, 12/1/30

    1,270        1,422,362   

Wright State University, 5.00%, 5/1/31

    500        518,500   
   
    $ 2,771,767   
   

Electric Utilities — 1.7%

  

Ohio Air Quality Development Authority, (Buckeye Power, Inc.), 6.00%, 12/1/40

  $ 500      $ 529,160   
   
    $ 529,160   
   

Escrowed / Prerefunded — 0.2%

  

Ohio State University, Escrowed to Maturity, 5.00%, 12/1/30

  $ 55      $ 64,139   
   
    $ 64,139   
   

General Obligations — 10.7%

  

Apollo Joint Vocational School District, 5.25%, 12/1/33

  $ 270      $ 285,779   

Beavercreek City School District, 5.00%, 12/1/30

    900        964,530   

Franklin County, 5.00%, 12/1/27

    500        548,525   

Marysville Exempted Village School District, 4.00%, 12/1/26

    1,000        1,009,520   

Napoleon Area City School District, (School Facilities Construction and Improvement), 5.00%, 12/1/36

    500        515,940   
   
    $ 3,324,294   
   

Hospital — 10.4%

  

Akron, Bath and Copley Joint Township Hospital District, (Children’s Hospital Medical Center of Akron), 5.00%, 11/15/38

  $ 440      $ 441,808   

Miami County, (Upper Valley Medical Center), 5.25%, 5/15/26

    500        512,525   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Hospital (continued)

  

Middleburg Heights, (Southwest General Health Center), 5.25%, 8/1/36

  $ 500      $ 504,275   

Middleburg Heights, (Southwest General Health Center), 5.25%, 8/1/41

    755        757,107   

Ohio Higher Educational Facility Commission, (Cleveland Clinic Health System), 5.00%, 1/1/32

    500        513,735   

Ohio Higher Educational Facility Commission, (Summa Health System), 5.75%, 11/15/40

    460        478,303   
   
    $ 3,207,753   
   

Insured – Education — 19.2%

  

Kent State University, (AGC), 5.00%, 5/1/26

  $ 1,000      $ 1,089,730   

Kent State University, (AGC), 5.00%, 5/1/29

    360        380,621   

Miami University, (AGM), (AMBAC), 3.25%, 9/1/26

    2,000        1,918,120   

Ohio University, (AGM), 5.00%, 12/1/33

    500        509,530   

University of Akron, Series B, (AGM), 5.00%, 1/1/38

    1,000        1,007,540   

Youngstown State University, (AGC), 5.50%, 12/15/33

    1,000        1,042,110   
   
    $ 5,947,651   
   

Insured – Electric Utilities — 20.6%

  

American Municipal Power-Ohio, Inc., (Prairie State Energy Campus), (AGC), 5.25%, 2/15/33

  $ 700      $ 718,921   

Cleveland Public Power System, (NPFG), 0.00%, 11/15/27

    2,750        1,407,945   

Cleveland Public Power System, (NPFG), 0.00%, 11/15/38

    1,000        258,350   

Ohio Municipal Electric Generation Agency, (NPFG), 0.00%, 2/15/25

    1,635        1,018,033   

Ohio Municipal Electric Generation Agency, (NPFG), 0.00%, 2/15/27

    5,000        2,745,100   

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/26

    305        251,323   
   
    $ 6,399,672   
   

Insured – Escrowed / Prerefunded — 7.1%

  

Cleveland Municipal School District, (AGM), Prerefunded to 6/1/14, 5.00%, 12/1/27

  $ 1,000      $ 1,032,210   

Ohio University, (AGM), Prerefunded to 12/1/13, 5.25%, 12/1/23

    1,170        1,180,074   
   
    $ 2,212,284   
   

Insured – General Obligations — 29.9%

  

Brooklyn City School District, (AGM), 5.00%, 12/1/38

  $ 445      $ 451,666   

Cincinnati City School District, (AGM), (FGIC), 5.25%, 12/1/30

    500        572,020   

Milford Exempt Village School District, (AGC), 5.25%, 12/1/36

    1,000        1,053,790   

Olentangy Local School District, (AGC), 5.00%, 12/1/36

    1,400        1,444,562   

Plain School District, (NPFG), 0.00%, 12/1/27

    2,400        1,388,904   
 

 

  30   See Notes to Financial Statements.


Eaton Vance

Ohio Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
             

Insured – General Obligations (continued)

  

St. Marys City School District, (AGM), 5.00%, 12/1/35

  $ 750      $ 762,997   

Sylvania City School District, (AGC), 5.00%, 12/1/26

    500        537,600   

Sylvania City School District, (AGC), 5.00%, 12/1/32

    1,000        1,045,080   

Wapakoneta City School District, (AGM), 4.75%, 12/1/35

    2,000        2,009,860   
   
    $ 9,266,479   
   

Insured – Hospital — 7.9%

  

Hamilton County, (Cincinnati Children’s Hospital), (NPFG), 5.00%, 5/15/32

  $ 425      $ 424,720   

Hamilton County, (Cincinnati Children’s Hospital), (NPFG), 5.125%, 5/15/28

    1,500        1,503,570   

Lorain County, (Catholic Healthcare Partners), (AGM),
18.273%, 2/1/29(1)(2)(3)

    440        506,915   
   
    $ 2,435,205   
   

Insured – Special Tax Revenue — 10.1%

  

Hamilton County Sales Tax, (AMBAC), 0.00%, 12/1/23

  $ 1,245      $ 820,505   

Hamilton County Sales Tax, (AMBAC), 0.00%, 12/1/24

    3,665        2,275,415   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    250        31,630   
   
    $ 3,127,550   
   

Insured – Transportation — 2.9%

  

Cleveland, Airport System Revenue, (AGM), 5.00%, 1/1/30

  $ 480      $ 494,025   

Puerto Rico Highway and Transportation Authority, (AGC),
(CIFG), 5.25%, 7/1/41(4)(5)

    500        405,375   
   
    $ 899,400   
   

Other Revenue — 1.2%

  

Summit County Port Authority, 5.00%, 12/1/31

  $ 350      $ 364,343   
   
    $ 364,343   
   

Senior Living / Life Care — 2.5%

  

Hamilton County, (Life Enriching Communities), 5.00%, 1/1/32

  $ 375      $ 364,260   

Lorain County Port Authority, (Kendal at Oberlin), 5.00%, 11/15/30

    190        193,850   

Warren County, (Otterbein Homes Obligated Group), 5.75%, 7/1/33

    220        228,208   
   
    $ 786,318   
   

Transportation — 3.6%

  

Ohio Turnpike and Infrastructure Commission, 0.00%, 2/15/43

  $ 310      $ 56,178   

Ohio Turnpike Commission, 5.00%, 2/15/31

    1,000        1,051,140   
   
    $ 1,107,318   
   
Security   Principal
Amount
(000’s omitted)
    Value  
             

Water and Sewer — 5.6%

  

Hamilton County, Sewer System, 5.00%, 12/1/32

  $ 750      $ 782,925   

Northeast Ohio Regional Sewer District, 4.00%, 11/15/33(4)(5)

    1,000        953,340   
   
    $ 1,736,265   
   

Total Tax-Exempt Investments — 154.6%
(identified cost $45,879,330)

   

  $ 47,917,335   
   

Auction Preferred Shares Plus Cumulative Unpaid Dividends — (54.9)%

  

  $ (17,000,160
   

Other Assets, Less Liabilities — 0.3%

  

  $ 77,628   
   

Net Assets Applicable to Common Shares — 100.0%

  

  $ 30,994,803   
   

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
CIFG     CIFG Assurance North America, Inc.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.

The Fund invests primarily in debt securities issued by Ohio municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 63.2% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 0.8% to 21.8% of total investments.

 

(1) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration. At September 30, 2013, the aggregate value of these securities is $506,915 or 1.6% of the Fund’s net assets applicable to common shares.

 

(2) 

Security has been issued as a leveraged residual interest bond with a variable interest rate. The stated interest rate represents the rate in effect at September 30, 2013.

 

(3) 

Security is subject to a shortfall agreement which may require the Fund to pay amounts to a counterparty in the event of a significant decline in the market value of the security held by the trust that issued the residual interest bond. In case of a shortfall, the maximum potential amount of payments the Fund could ultimately be required to make under the agreement is $1,320,000. However, such shortfall payment would be reduced by the proceeds from the sale of the security held by the trust that issued the residual interest bond.

 

(4) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

(5) 

Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $308,715.

 

 

  31   See Notes to Financial Statements.


Eaton Vance

Pennsylvania Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments

 

 

Tax-Exempt Investments — 167.4%   
   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Education — 27.1%

               

Allegheny County Higher Education Building Authority, (Duquesne University), 5.50%, 3/1/31

  $ 1,050      $ 1,135,512   

Bucks County Industrial Development Authority, (George School), 5.00%, 9/15/41

    640        662,496   

Bucks County Industrial Development Authority, (George School), 5.00%, 9/15/44

    250        259,125   

General Authority of South Central Pennsylvania, (York College of Pennsylvania), 5.50%, 11/1/31

    1,500        1,604,385   

Pennsylvania Higher Educational Facilities Authority, (Saint Joseph’s University), 5.00%, 11/1/40

    440        441,804   

Pennsylvania Higher Educational Facilities Authority, (Thomas Jefferson University), 5.00%, 3/1/40

    925        946,876   

Pennsylvania Higher Educational Facilities Authority, (University of Pennsylvania), 4.75%, 7/15/35

    2,900        2,905,481   

Pennsylvania Higher Educational Facilities Authority, (Ursinus College), 5.00%, 1/1/29

    560        580,653   

State Public School Building Authority, (Northampton County Area Community College), 5.50%, 3/1/31

    750        801,225   

Swarthmore Borough Authority, (Swarthmore College), 5.00%, 9/15/38

    250        264,050   

Washington County Industrial Development Authority, (Washington and Jefferson College), 5.25%, 11/1/30

    575        601,323   
                 
  $ 10,202,930   
                 

General Obligations — 15.7%

               

Delaware Valley Regional Finance Authority, 5.75%, 7/1/32

  $ 1,000      $ 1,056,650   

Pennsylvania, 4.00%, 4/1/29(1)(2)

    3,000        3,042,690   

West York Area School District, 5.00%, 4/1/33

    750        788,805   

York County, 5.00%, 6/1/38

    1,000        1,031,660   
                 
  $ 5,919,805   
                 

Hospital — 17.4%

               

Chester County Health and Education Facilities Authority, (Jefferson Health System), 5.00%, 5/15/40

  $ 750      $ 753,315   

Dauphin County General Authority, (Pinnacle Health System Project), 5.00%, 6/1/42

    600        584,358   

Franklin County Industrial Development Authority, (The Chambersburg Hospital), 5.375%, 7/1/42

    1,000        1,010,060   

Lehigh County General Purpose Authority, (Lehigh Valley Health Network), 4.00%, 7/1/33

    500        448,995   

Monroe County Hospital Authority, (Pocono Medical Center), 5.125%, 1/1/37

    1,250        1,251,012   

Monroeville Finance Authority, (UPMC Obligated Group), 5.00%, 2/15/42

    500        504,075   
Security   Principal
Amount
(000’s omitted)
    Value  
   

Hospital (continued)

               

Northampton County General Purpose Authority, (Saint Luke’s Hospital), 5.50%, 8/15/33

  $ 250      $ 254,345   

Pennsylvania Higher Educational Facilities Authority, (UPMC Health System), 5.00%, 5/15/31

    675        687,528   

Philadelphia Hospitals and Higher Education Facilities Authority, 5.00%, 7/1/32

    750        781,493   

South Fork Municipal Authority, (Conemaugh Health System), 5.50%, 7/1/29

    250        256,133   
                 
  $ 6,531,314   
                 

Housing — 1.1%

               

Pennsylvania Housing Finance Agency, SFMR, 4.00%, 10/1/38

  $ 500      $ 420,280   
                 
  $ 420,280   
                 

Insured – Education — 15.3%

               

Lycoming County Authority, (Pennsylvania College of Technology), (AGC), 5.50%, 10/1/37

  $ 500      $ 520,795   

Pennsylvania Higher Educational Facilities Authority, (Drexel University), (NPFG), 5.00%, 5/1/37

    1,655        1,664,649   

Pennsylvania Higher Educational Facilities Authority, (Temple University), (NPFG), 4.50%, 4/1/36

    1,305        1,267,220   

Pennsylvania Higher Educational Facilities Authority, (University of the Sciences in Philadelphia), (AGC), 5.00%, 11/1/37

    500        505,545   

State Public School Building Authority, (Delaware County Community College), (AGM), 5.00%, 10/1/27

    500        523,880   

State Public School Building Authority, (Delaware County Community College), (AGM), 5.00%, 10/1/29

    375        387,968   

State Public School Building Authority, (Delaware County Community College), (AGM), 5.00%, 10/1/32

    875        897,741   
                 
  $ 5,767,798   
                 

Insured – Electric Utilities — 2.6%

               

Puerto Rico Electric Power Authority, (FGIC), (NPFG), 5.25%, 7/1/35

  $ 750      $ 578,190   

Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/34

    490        376,104   
                 
  $ 954,294   
                 

Insured – Escrowed / Prerefunded — 1.4%

               

Centre County Hospital Authority, (Mount Nittany Medical Center), (AGC), Prerefunded to 11/15/14, 6.25%, 11/15/44

  $ 500      $ 533,800   
                 
  $ 533,800   
                 

Insured – General Obligations — 31.5%

               

Bethlehem Area School District, (AGM), 5.25%, 1/15/25

  $ 1,250      $ 1,361,112   

Centennial School District, (AGM), 5.25%, 12/15/37

    660        719,116   
 

 

  32   See Notes to Financial Statements.


Eaton Vance

Pennsylvania Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – General Obligations (continued)

               

Central Greene School District, (AGM), 5.00%, 2/15/35

  $ 1,350      $ 1,372,869   

Erie School District, (AMBAC), 0.00%, 9/1/30

    1,000        428,650   

Harrisburg School District, (AGC), 5.00%, 11/15/33

    500        513,275   

Laurel Highlands School District, (AGM), 5.00%, 2/1/37

    750        770,483   

McKeesport School District, (NPFG), 0.00%, 10/1/21

    2,555        1,833,442   

Norwin School District, (AGM), 3.25%, 4/1/27

    1,475        1,344,920   

Reading School District, (AGM), 5.00%, 3/1/35

    1,500        1,525,695   

Scranton School District, (AGM), 5.00%, 7/15/38

    1,000        1,005,290   

Shaler Area School District, (XLCA), 0.00%, 9/1/33

    2,550        975,987   
                 
  $ 11,850,839   
                 

Insured – Hospital — 5.1%

               

Allegheny County Hospital Development Authority, (UPMC Health System), (NPFG), 6.00%, 7/1/24

  $ 250      $ 301,353   

Lehigh County General Purpose Authority, (Lehigh Valley Health Network), (AGM), 5.00%, 7/1/35

    1,620        1,625,103   
                 
  $ 1,926,456   
                 

Insured – Industrial Development Revenue — 2.7%

  

Pennsylvania Economic Development Financing Authority, (Aqua Pennsylvania, Inc.), (BHAC), 5.00%, 10/1/39(1)

  $ 1,000      $ 1,017,100   
                 
  $ 1,017,100   
                 

Insured – Lease Revenue / Certificates of Participation — 4.7%

  

Commonwealth Financing Authority, (AGC), 5.00%, 6/1/31

  $ 500      $ 514,375   

Philadelphia Authority for Industrial Development, (One Benjamin Franklin), (AGM), 4.75%, 2/15/27

    1,215        1,238,850   
                 
  $ 1,753,225   
                 

Insured – Special Tax Revenue — 3.2%

               

Pittsburgh and Allegheny County Sports & Exhibition Authority, Sales Tax Revenue, (AGM), 5.00%, 2/1/31

  $ 1,000      $ 1,042,230   

Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45

    1,295        163,843   
                 
  $ 1,206,073   
                 

Insured – Transportation — 5.4%

               

Philadelphia, Airport Revenue, (AGC), 5.375%, 6/15/29

  $ 295      $ 323,692   

Puerto Rico Highway and Transportation Authority, (AGC), (CIFG), 5.25%, 7/1/41(1) (2)

    2,100        1,702,575   
                 
  $ 2,026,267   
                 

Insured – Utilities — 2.3%

               

Philadelphia Gas Works, (AMBAC), 5.00%, 10/1/37

  $ 890      $ 861,013   
                 
  $ 861,013   
                 
Security   Principal
Amount
(000’s omitted)
    Value  
   

Insured – Water and Sewer — 14.4%

               

Allegheny County Sanitation Authority, (BHAC), (FGIC), 5.00%, 12/1/32

  $ 300      $ 310,044   

Allegheny County Sanitation Authority, (BHAC), (NPFG), 5.00%, 12/1/22

    1,500        1,628,880   

Bucks County Water and Sewer Authority, (AGM), 5.00%, 12/1/35

    500        516,690   

Erie Sewer Authority, (AMBAC), 0.00%, 12/1/26

    1,920        935,270   

Erie Sewer Authority, Series A, (AMBAC), 0.00%, 12/1/25

    1,430        748,133   

Erie Sewer Authority, Series B, (AMBAC), 0.00%, 12/1/25

    2,155        1,127,431   

Saxonburg Water and Sewer Authority, (AGC), 5.00%, 3/1/35

    150        150,686   
                 
  $ 5,417,134   
                 

Senior Living / Life Care — 0.6%

               

Montgomery County Industrial Development Authority, (Foulkeways at Gwynedd), 5.00%, 12/1/24

  $ 200      $ 203,180   
                 
  $ 203,180   
                 

Special Tax Revenue — 0.3%

               

Virgin Islands Public Finance Authority, 6.75%, 10/1/37

  $ 110      $ 120,922   
                 
  $ 120,922   
                 

Transportation — 13.1%

               

Allegheny County Port Authority, 5.75%, 3/1/29

  $ 1,500      $ 1,643,835   

Delaware River Port Authority of Pennsylvania and New Jersey, 5.00%, 1/1/35

    465        483,684   

Delaware River Port Authority of Pennsylvania and New Jersey, 5.00%, 1/1/40

    730        751,257   

Pennsylvania Turnpike Commission, 5.25%, 12/1/31

    1,000        1,051,430   

Pennsylvania Turnpike Commission, 5.35%, (0.00% until 12/1/15), 12/1/30

    500        462,770   

Philadelphia Airport, 5.25%, 6/15/27

    500        533,725   
                 
  $ 4,926,701   
                 

Water and Sewer — 3.5%

               

Philadelphia, Water and Wastewater Revenue, 5.00%, 1/1/36

  $ 500      $ 510,945   

Philadelphia, Water and Wastewater Revenue, 5.25%, 1/1/32

    765        807,626   
                 
  $ 1,318,571   
                 

Total Tax-Exempt Investments — 167.4%
(identified cost $62,833,938)

    $ 62,957,702   
                 

Auction Preferred Shares Plus Cumulative Unpaid Dividends — (57.8)%

  

  $ (21,725,273
                 

Other Assets, Less Liabilities — (9.6)%

  

  $ (3,613,831
                 

Net Assets Applicable to Common Shares — 100.0%

  

  $ 37,618,598   
                 
 

 

  33   See Notes to Financial Statements.


Eaton Vance

Pennsylvania Municipal Bond Fund

September 30, 2013

 

Portfolio of Investments — continued

 

 

The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.

 

AGC     Assured Guaranty Corp.
AGM     Assured Guaranty Municipal Corp.
AMBAC     AMBAC Financial Group, Inc.
BHAC     Berkshire Hathaway Assurance Corp.
CIFG     CIFG Assurance North America, Inc.
FGIC     Financial Guaranty Insurance Company
NPFG     National Public Finance Guaranty Corp.
SFMR     Single Family Mortgage Revenue
XLCA     XL Capital Assurance, Inc.

The Fund invests primarily in debt securities issued by Pennsylvania municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. In order to reduce the risk associated with such economic developments, at September 30, 2013, 52.9% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency ranged from 1.4% to 22.8% of total investments.

 

(1) 

Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).

 

(2) 

Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $1,295,265.

 

 

  34   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Assets and Liabilities

 

 

    September 30, 2013  
Assets   Municipal Fund II     California Fund II     Massachusetts Fund     Michigan Fund  

Investments —

       

Identified cost

  $ 203,254,853      $ 76,267,295      $ 37,973,295      $ 32,923,895   

Unrealized appreciation (depreciation)

    (399,629     2,053,341        1,694,297        5,438   

Investments, at value

  $ 202,855,224      $ 78,320,636      $ 39,667,592      $ 32,929,333   

Cash

  $      $ 2,122,813      $ 680,523      $   

Restricted cash*

    174,000        105,000        50,000        21,000   

Interest receivable

    2,694,566        862,681        505,570        456,476   

Receivable for investments sold

    30,334        4,928               769,622   

Receivable for variation margin on open financial futures contracts

    3,625        500        875        438   

Deferred debt issuance costs

    40,269        17,777        2,151          

Total assets

  $ 205,798,018      $ 81,434,335      $ 40,906,711      $ 34,176,869   
Liabilities   

Payable for floating rate notes issued

  $ 41,885,000      $ 9,885,000      $ 3,330,000      $   

Payable for when-issued securities

    354,701                      483,655   

Due to custodian

    23,111                      375,584   

Payable to affiliates:

       

Investment adviser fee

    91,083        35,200        17,462        14,687   

Interest expense and fees payable

    75,946        18,146        7,357          

Accrued expenses

    98,676        63,214        51,702        46,487   

Total liabilities

  $ 42,528,517      $ 10,001,560      $ 3,406,521      $ 920,413   

Auction preferred shares at liquidation value plus cumulative unpaid dividends

  $ 44,700,562      $ 25,700,403      $ 13,575,171      $ 13,325,251   

Net assets applicable to common shares

  $ 118,568,939      $ 45,732,372      $ 23,925,019      $ 19,931,205   
Sources of Net Assets   

Common shares, $0.01 par value, unlimited number of shares authorized

  $ 100,134      $ 38,852      $ 17,685      $ 15,141   

Additional paid-in capital

    141,844,963        55,017,475        24,878,979        21,061,153   

Accumulated net realized loss

    (22,639,752     (11,356,964     (2,710,850     (1,180,036

Accumulated undistributed (distributions in excess of) net investment income

    (243,780     66,426        67,355        47,452   

Net unrealized appreciation (depreciation)

    (492,626     1,966,583        1,671,850        (12,505

Net assets applicable to common shares

  $ 118,568,939      $ 45,732,372      $ 23,925,019      $ 19,931,205   

Auction Preferred Shares Issued and Outstanding

(Liquidation preference of $25,000 per share)

    1,788 (1)      1,028        543        533   
Common Shares Outstanding     10,013,381        3,885,230        1,768,514        1,514,065   
Net Asset Value Per Common Share   

Net assets applicable to common shares ÷ common shares issued and outstanding

  $ 11.84      $ 11.77      $ 13.53      $ 13.16   

 

* Represents restricted cash on deposit at the broker for open financial futures contracts.

 

(1) 

Comprised of 894 Series A shares and 894 Series B shares.

 

  35   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Assets and Liabilities — continued

 

 

    September 30, 2013  
Assets   New Jersey Fund     New York Fund II     Ohio Fund     Pennsylvania Fund  

Investments —

       

Identified cost

  $ 50,482,341      $ 50,277,476      $ 45,879,330      $ 62,833,938   

Unrealized appreciation

    2,255,708        1,283,091        2,038,005        123,764   

Investments, at value

  $ 52,738,049      $ 51,560,567      $ 47,917,335      $ 62,957,702   

Cash

  $ 632,629      $ 1,498,880      $ 68,883      $   

Restricted cash*

    185,000        66,000        68,000        167,000   

Interest receivable

    550,665        674,634        567,488        786,195   

Receivable for investments sold

    15,000        10,133        500,000          

Receivable for variation margin on open financial futures contracts

    3,750        1,375        1,375        3,438   

Deferred debt issuance costs

    288        3,067                 

Total assets

  $ 54,125,381      $ 53,814,656      $ 49,123,081      $ 63,914,335   
Liabilities   

Payable for floating rate notes issued

  $ 225,000      $ 8,690,000      $ 1,050,000      $ 4,440,000   

Due to custodian

                         30,013   

Payable to affiliates:

       

Investment adviser fee

    23,978        23,569        21,713        28,224   

Interest expense and fees payable

    34        12,655        3,250        13,991   

Accrued expenses

    55,139        59,618        53,155        58,236   

Total liabilities

  $ 304,151      $ 8,785,842      $ 1,128,118      $ 4,570,464   

Auction preferred shares at liquidation value plus cumulative unpaid dividends

  $ 19,600,431      $ 13,250,250      $ 17,000,160      $ 21,725,273   

Net assets applicable to common shares

  $ 34,220,799      $ 31,778,564      $ 30,994,803      $ 37,618,598   
Sources of Net Assets   

Common shares, $0.01 par value, unlimited number of shares authorized

  $ 26,089      $ 25,669      $ 25,370      $ 29,598   

Additional paid-in capital

    36,954,964        36,355,002        35,585,298        41,928,282   

Accumulated net realized loss

    (5,054,874     (5,926,031     (6,672,142     (4,532,326

Accumulated undistributed net investment income

    135,116        76,108        68,664        157,467   

Net unrealized appreciation

    2,159,504        1,247,816        1,987,613        35,577   

Net assets applicable to common shares

  $ 34,220,799      $ 31,778,564      $ 30,994,803      $ 37,618,598   

Auction Preferred Shares Issued and Outstanding

(Liquidation preference of $25,000 per share)

    784        530        680        869   
Common Shares Outstanding     2,608,910        2,566,941        2,536,999        2,959,759   
Net Asset Value Per Common Share   

Net assets applicable to common shares ÷ common shares issued and outstanding

  $ 13.12      $ 12.38      $ 12.22      $ 12.71   

 

* Represents restricted cash on deposit at the broker for open financial futures contracts.

 

  36   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Operations

 

 

    Year Ended September 30, 2013  
Investment Income   Municipal Fund II     California Fund II     Massachusetts Fund     Michigan Fund  

Interest

  $ 9,408,810      $ 3,675,499      $ 1,825,963      $ 1,531,782   

Total investment income

  $ 9,408,810      $ 3,675,499      $ 1,825,963      $ 1,531,782   
Expenses   

Investment adviser fee

  $ 1,190,165      $ 462,910      $ 232,201      $ 193,706   

Trustees’ fees and expenses

    8,915        3,776        2,141        1,875   

Custodian fee

    105,544        51,252        34,008        31,612   

Transfer and dividend disbursing agent fees

    18,182        18,131        18,106        18,151   

Legal and accounting services

    124,538        47,572        40,980        35,415   

Printing and postage

    21,791        10,023        7,264        7,009   

Interest expense and fees

    290,299        66,898        23,435          

Preferred shares service fee

    67,127        38,595        20,385        20,104   

Miscellaneous

    57,498        38,595        31,973        30,287   

Total expenses

  $ 1,884,059      $ 737,752      $ 410,493      $ 338,159   

Deduct —

       

Reduction of custodian fee

  $ 566      $ 364      $ 322      $ 467   

Total expense reductions

  $ 566      $ 364      $ 322      $ 467   

Net expenses

  $ 1,883,493      $ 737,388      $ 410,171      $ 337,692   

Net investment income

  $ 7,525,317      $ 2,938,111      $ 1,415,792      $ 1,194,090   
Realized and Unrealized Gain (Loss)   

Net realized gain (loss) —

       

Investment transactions

  $ (952,952   $ (702,642   $ (97,287   $ 376,824   

Extinguishment of debt

    (3,141                     

Financial futures contracts

    737,918        389,889        178,439        38,916   

Net realized gain (loss)

  $ (218,175   $ (312,753   $ 81,152      $ 415,740   

Change in unrealized appreciation (depreciation) —

       

Investments

  $ (14,832,339   $ (5,929,803   $ (4,275,440   $ (3,214,785

Financial futures contracts

    (85,711     (77,997     (27,562     (13,344

Net change in unrealized appreciation (depreciation)

  $ (14,918,050   $ (6,007,800   $ (4,303,002   $ (3,228,129

Net realized and unrealized loss

  $ (15,136,225   $ (6,320,553   $ (4,221,850   $ (2,812,389

Distributions to preferred shareholders

                               

From net investment income

  $ (89,559   $ (51,075   $ (26,566   $ (25,938

Net decrease in net assets from operations

  $ (7,700,467   $ (3,433,517   $ (2,832,624   $ (1,644,237

 

  37   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Operations — continued

 

 

    Year Ended September 30, 2013  
Investment Income   New Jersey Fund     New York Fund II     Ohio Fund     Pennsylvania Fund  

Interest

  $ 2,492,365      $ 2,371,804      $ 2,325,401      $ 2,983,420   

Total investment income

  $ 2,492,365      $ 2,371,804      $ 2,325,401      $ 2,983,420   
Expenses   

Investment adviser fee

  $ 321,684      $ 310,113      $ 283,468      $ 362,713   

Trustees’ fees and expenses

    2,766        2,275        2,508        3,078   

Custodian fee

    41,710        39,468        38,637        43,669   

Transfer and dividend disbursing agent fees

    18,126        18,383        18,141        19,338   

Legal and accounting services

    41,803        49,088        41,056        45,115   

Printing and postage

    8,736        8,706        9,845        10,535   

Interest expense and fees

    15,401        56,922        5,293        25,672   

Preferred shares service fee

    29,434        19,896        25,528        32,624   

Miscellaneous

    33,754        34,938        33,366        36,684   

Total expenses

  $ 513,414      $ 539,789      $ 457,842      $ 579,428   

Deduct —

       

Reduction of custodian fee

  $ 179      $ 352      $ 188      $ 354   

Total expense reductions

  $ 179      $ 352      $ 188      $ 354   

Net expenses

  $ 513,235      $ 539,437      $ 457,654      $ 579,074   

Net investment income

  $ 1,979,130      $ 1,832,367      $ 1,867,747      $ 2,404,346   
Realized and Unrealized Gain (Loss)   

Net realized gain (loss) —

       

Investment transactions

  $ (111,556   $ (453,481   $ (252,284   $ (483,929

Extinguishment of debt

    (6,266                     

Financial futures contracts

    945,637        280,403        206,506        733,039   

Net realized gain (loss)

  $ 827,815      $ (173,078   $ (45,778   $ 249,110   

Change in unrealized appreciation (depreciation) —

       

Investments

  $ (4,717,423   $ (3,727,680   $ (3,925,920   $ (5,303,812

Financial futures contracts

    (123,606     (43,313     (56,238     (110,108

Net change in unrealized appreciation (depreciation)

  $ (4,841,029   $ (3,770,993   $ (3,982,158   $ (5,413,920

Net realized and unrealized loss

  $ (4,013,214   $ (3,944,071   $ (4,027,936   $ (5,164,810

Distributions to preferred shareholders

                               

From net investment income

  $ (38,265   $ (25,993   $ (34,076   $ (42,842

Net decrease in net assets from operations

  $ (2,072,349   $ (2,137,697   $ (2,194,265   $ (2,803,306

 

  38   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Changes in Net Assets

 

 

    Year Ended September 30, 2013  
Increase (Decrease) in Net Assets   Municipal Fund II     California Fund II     Massachusetts Fund     Michigan Fund  

From operations —

       

Net investment income

  $ 7,525,317      $ 2,938,111      $ 1,415,792      $ 1,194,090   

Net realized gain (loss) from investment transactions, extinguishment of debt and financial futures contracts

    (218,175     (312,753     81,152        415,740   

Net change in unrealized appreciation (depreciation) from investments and financial futures contracts

    (14,918,050     (6,007,800     (4,303,002     (3,228,129

Distributions to preferred shareholders —

       

From net investment income

    (89,559     (51,075     (26,566     (25,938

Net decrease in net assets from operations

  $ (7,700,467   $ (3,433,517   $ (2,832,624   $ (1,644,237

Distributions to common shareholders —

       

From net investment income

  $ (7,583,773   $ (2,917,478   $ (1,391,104   $ (1,185,728

Total distributions to common shareholders

  $ (7,583,773   $ (2,917,478   $ (1,391,104   $ (1,185,728

Capital share transactions —

       

Reinvestment of distributions to common shareholders

  $ 80,915      $ 20,779      $ 11,047      $ 2,212   

Net increase in net assets from capital share transactions

  $ 80,915      $ 20,779      $ 11,047      $ 2,212   

Net decrease in net assets

  $ (15,203,325   $ (6,330,216   $ (4,212,681   $ (2,827,753
Net Assets Applicable to Common Shares   

At beginning of year

  $ 133,772,264      $ 52,062,588      $ 28,137,700      $ 22,758,958   

At end of year

  $ 118,568,939      $ 45,732,372      $ 23,925,019      $ 19,931,205   
Accumulated undistributed (distributions in excess of) net investment income
included in net assets applicable to common shares
   

At end of year

  $ (243,780   $ 66,426      $ 67,355      $ 47,452   

 

  39   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Changes in Net Assets — continued

 

 

    Year Ended September 30, 2013  
Increase (Decrease) in Net Assets   New Jersey Fund     New York Fund II     Ohio Fund     Pennsylvania Fund  

From operations —

       

Net investment income

  $ 1,979,130      $ 1,832,367      $ 1,867,747      $ 2,404,346   

Net realized gain (loss) from investment transactions, extinguishment of debt and financial futures contracts

    827,815        (173,078     (45,778     249,110   

Net change in unrealized appreciation (depreciation) from investments and financial futures contracts

    (4,841,029     (3,770,993     (3,982,158     (5,413,920

Distributions to preferred shareholders —

       

From net investment income

    (38,265     (25,993     (34,076     (42,842

Net decrease in net assets from operations

  $ (2,072,349   $ (2,137,697   $ (2,194,265   $ (2,803,306

Distributions to common shareholders —

       

From net investment income

  $ (1,895,291   $ (1,763,312   $ (1,824,719   $ (2,386,340

Total distributions to common shareholders

  $ (1,895,291   $ (1,763,312   $ (1,824,719   $ (2,386,340

Capital share transactions —

       

Reinvestment of distributions to common shareholders

  $ 48,477      $ 10,514      $ 28,917      $ 17,233   

Net increase in net assets from capital share transactions

  $ 48,477      $ 10,514      $ 28,917      $ 17,233   

Net decrease in net assets

  $ (3,919,163   $ (3,890,495   $ (3,990,067   $ (5,172,413
Net Assets Applicable to Common Shares   

At beginning of year

  $ 38,139,962      $ 35,669,059      $ 34,984,870      $ 42,791,011   

At end of year

  $ 34,220,799      $ 31,778,564      $ 30,994,803      $ 37,618,598   
Accumulated undistributed net investment income
included in net assets applicable to common shares
   

At end of year

  $ 135,116      $ 76,108      $ 68,664      $ 157,467   

 

  40   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Changes in Net Assets — continued

 

 

    Year Ended September 30, 2012  
Increase (Decrease) in Net Assets   Municipal Fund II     California Fund II     Massachusetts Fund     Michigan Fund  

From operations —

       

Net investment income

  $ 7,777,620      $ 3,018,762      $ 1,450,031      $ 1,304,791   

Net realized loss from investment transactions, extinguishment of debt, financial futures contracts and swap contracts

    (292,597     (926,700     (321,765     (183,596

Net change in unrealized appreciation (depreciation) from investments, financial futures contracts and swap contracts

    14,600,537        7,550,416        3,360,601        1,765,094   

Distributions to preferred shareholders —

       

From net investment income

    (108,522     (62,425     (32,805     (32,152

Net increase in net assets from operations

  $ 21,977,038      $ 9,580,053      $ 4,456,062      $ 2,854,137   

Distributions to common shareholders —

       

From net investment income

  $ (8,740,049   $ (3,080,987   $ (1,483,981   $ (1,345,340

Total distributions to common shareholders

  $ (8,740,049   $ (3,080,987   $ (1,483,981   $ (1,345,340

Capital share transactions —

       

Reinvestment of distributions to common shareholders

  $ 227,531      $ 28,782      $ 31,194      $ 17,365   

Net increase in net assets from capital share transactions

  $ 227,531      $ 28,782      $ 31,194      $ 17,365   

Net increase in net assets

  $ 13,464,520      $ 6,527,848      $ 3,003,275      $ 1,526,162   
Net Assets Applicable to Common Shares   

At beginning of year

  $ 120,307,744      $ 45,534,740      $ 25,134,425      $ 21,232,796   

At end of year

  $ 133,772,264      $ 52,062,588      $ 28,137,700      $ 22,758,958   
Accumulated undistributed (distributions in excess of) net investment income
included in net assets applicable to common shares
   

At end of year

  $ (83,533   $ 109,944      $ 76,021      $ 62,300   

 

  41   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Changes in Net Assets — continued

 

 

    Year Ended September 30, 2012  
Increase (Decrease) in Net Assets   New Jersey Fund     New York Fund II     Ohio Fund     Pennsylvania Fund  

From operations —

       

Net investment income

  $ 2,131,601      $ 1,987,744      $ 1,929,229      $ 2,450,492   

Net realized gain (loss) from investment transactions, financial futures contracts and swap contracts

    (1,190,400     308,506        (529,906     (926,534

Net change in unrealized appreciation (depreciation) from investments, financial futures contracts and swap contracts

    5,016,215        2,670,692        4,605,768        4,893,045   

Distributions to preferred shareholders —

       

From net investment income

    (48,133     (32,137     (41,252     (52,771

Net increase in net assets from operations

  $ 5,909,283      $ 4,934,805      $ 5,963,839      $ 6,364,232   

Distributions to common shareholders —

       

From net investment income

  $ (2,110,164   $ (2,011,158   $ (1,955,405   $ (2,581,543

Total distributions to common shareholders

  $ (2,110,164   $ (2,011,158   $ (1,955,405   $ (2,581,543

Capital share transactions —

       

Reinvestment of distributions to common shareholders

  $ 154,738      $ 28,780      $ 54,834      $ 36,125   

Net increase in net assets from capital share transactions

  $ 154,738      $ 28,780      $ 54,834      $ 36,125   

Net increase in net assets

  $ 3,953,857      $ 2,952,427      $ 4,063,268      $ 3,818,814   
Net Assets Applicable to Common Shares   

At beginning of year

  $ 34,186,105      $ 32,716,632      $ 30,921,602      $ 38,972,197   

At end of year

  $ 38,139,962      $ 35,669,059      $ 34,984,870      $ 42,791,011   
Accumulated undistributed net investment income
included in net assets applicable to common shares
   

At end of year

  $ 91,457      $ 48,532      $ 102,076      $ 204,908   

 

  42   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Statements of Cash Flows*

 

 

    Year Ended September 30, 2013  
Cash Flows From Operating Activities   Municipal Fund II     California Fund II     New York Fund II  

Net decrease in net assets from operations

  $ (7,700,467   $ (3,433,517   $ (2,137,697

Distributions to preferred shareholders

    89,559        51,075        25,993   

Net decrease in net assets from operations excluding distributions to preferred shareholders

  $ (7,610,908   $ (3,382,442   $ (2,111,704

Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities:

     

Investments purchased

    (14,859,122     (5,922,980     (7,351,888

Investments sold

    15,737,388        8,173,375        8,834,195   

Net amortization/accretion of premium (discount)

    (602,137     (392,764     (58,184

Amortization of deferred debt issuance costs

    8,544        2,504        1,117   

Decrease in restricted cash

    43,000        25,000        14,000   

Decrease in interest receivable

    10,674        18,419        54,330   

Decrease in receivable for variation margin on open financial futures contracts

    3,625        3,390        1,375   

Decrease in receivable from the transfer agent

    15,509        3,457        2,585   

Decrease in payable to affiliate for investment adviser fee

    (9,188     (3,197     (1,736

Decrease in interest expense and fees payable

    (11,370     (2,428     (6,304

Decrease in accrued expenses

    (3,072     (1,929     (441

Net change in unrealized (appreciation) depreciation from investments

    14,832,339        5,929,803        3,727,680   

Net realized loss from investments

    952,952        702,642        453,481   

Net realized loss on extinguishment of debt

    3,141                 

Net cash provided by operating activities

  $ 8,511,375      $ 5,152,850      $ 3,558,506   
Cash Flows From Financing Activities                        

Distributions paid to common shareholders, net of reinvestments

  $ (7,502,858   $ (2,896,699   $ (1,752,798

Cash distributions paid to preferred shareholders

    (91,172     (51,442     (26,240

Proceeds from secured borrowings

                  1,880,000   

Repayment of secured borrowings

    (1,020,000            (2,065,000

Increase (decrease) in due to custodian

    23,111        (81,896     (95,588

Net cash used in financing activities

  $ (8,590,919   $ (3,030,037   $ (2,059,626

Net increase (decrease) in cash

  $ (79,544   $ 2,122,813      $ 1,498,880   

Cash at beginning of year

  $ 79,544      $      $   

Cash at end of year

  $      $ 2,122,813      $ 1,498,880   
Supplemental disclosure of cash flow information:                        

Noncash financing activities not included herein consist of:

     

Reinvestment of dividends and distributions

  $ 80,915      $ 20,779      $ 10,514   

Cash paid for interest and fees

    293,125        66,822        62,109   

 

* Statement of Cash Flows is not required for Massachusetts Fund, Michigan Fund, New Jersey Fund, Ohio Fund and Pennsylvania Fund.

 

  43   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights

 

Selected data for a common share outstanding during the periods stated

 

    Municipal Fund II  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 13.370      $ 12.040      $ 12.720      $ 12.880      $ 11.030   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.752      $ 0.778      $ 0.929      $ 0.961      $ 0.943   

Net realized and unrealized gain (loss)

    (1.516     1.437        (0.638     (0.164     1.813   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.009     (0.011     (0.015     (0.018     (0.058

Total income (loss) from operations

  $ (0.773   $ 2.204      $ 0.276      $ 0.779      $ 2.698   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.757   $ (0.874   $ (0.956   $ (0.939   $ (0.848

Total distributions to common shareholders

  $ (0.757   $ (0.874   $ (0.956   $ (0.939   $ (0.848

Net asset value — End of year (Common shares)

  $ 11.840      $ 13.370      $ 12.040      $ 12.720      $ 12.880   

Market value — End of year (Common shares)

  $ 11.200      $ 13.880      $ 13.280      $ 14.010      $ 13.370   

Total Investment Return on Net Asset Value(2)

    (5.83 )%      18.56     2.45     6.26     26.08

Total Investment Return on Market Value(2)

    (14.20 )%      11.59     2.60     12.78     23.88
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 118,569      $ 133,772      $ 120,308      $ 126,814      $ 128,150   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees

    1.23     1.37     1.50     1.22     1.28

Interest and fee expense(4)

    0.23     0.28     0.35     0.38     0.87

Total expenses before custodian fee reduction

    1.46     1.65     1.85     1.60     2.15

Expenses after custodian fee reduction excluding interest and fees

    1.23     1.37     1.49     1.22     1.27

Net investment income

    5.83     6.14     8.23     7.86     9.05

Portfolio Turnover

    7     16     12     13     22

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees

    0.91     1.02     1.07     0.89     0.89

Interest and fee expense(4)

    0.17     0.20     0.25     0.28     0.61

Total expenses before custodian fee reduction

    1.08     1.22     1.32     1.17     1.50

Expenses after custodian fee reduction excluding interest and fees

    0.91     1.02     1.07     0.89     0.89

Net investment income

    4.33     4.54     5.89     5.75     6.32

Senior Securities:

         

Total preferred shares outstanding

    1,788        1,788        1,788        1,788        1,788   

Asset coverage per preferred share(5)

  $ 91,314      $ 99,818      $ 92,287      $ 95,926      $ 96,674   

Involuntary liquidation preference per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(5) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(6) 

Plus accumulated and unpaid dividends.

 

  44   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    California Fund II  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 13.410      $ 11.730      $ 12.520      $ 12.940      $ 11.310   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.756      $ 0.777      $ 0.855      $ 0.898      $ 0.877   

Net realized and unrealized gain (loss)

    (1.632     1.712        (0.761     (0.433     1.601   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.013     (0.016     (0.023     (0.027     (0.084

Total income (loss) from operations

  $ (0.889   $ 2.473      $ 0.071      $ 0.438      $ 2.394   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.751   $ (0.793   $ (0.861   $ (0.858   $ (0.764

Total distributions to common shareholders

  $ (0.751   $ (0.793   $ (0.861   $ (0.858   $ (0.764

Net asset value — End of year (Common shares)

  $ 11.770      $ 13.410      $ 11.730      $ 12.520      $ 12.940   

Market value — End of year (Common shares)

  $ 11.260      $ 13.630      $ 12.260      $ 13.250      $ 12.500   

Total Investment Return on Net Asset Value(2)

    (6.75 )%      21.62     1.31     3.93     23.06

Total Investment Return on Market Value(2)

    (12.29 )%      18.36     0.06     13.86     31.17
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 45,732      $ 52,063      $ 45,535      $ 48,529      $ 50,080   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees

    1.34     1.36     1.47     1.39     1.51

Interest and fee expense(4)

    0.13     0.14     0.15     0.16     0.37

Total expenses before custodian fee reduction

    1.47     1.50     1.62     1.55     1.88

Expenses after custodian fee reduction excluding interest and fees

    1.34     1.36     1.47     1.38     1.50

Net investment income

    5.84     6.16     7.75     7.47     8.23

Portfolio Turnover

    7     15     34     17     17

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees

    0.88     0.89     0.92     0.89     0.93

Interest and fee expense(4)

    0.09     0.09     0.09     0.11     0.23

Total expenses before custodian fee reduction

    0.97     0.98     1.01     1.00     1.16

Expenses after custodian fee reduction excluding interest and fees

    0.88     0.89     0.92     0.89     0.93

Net investment income

    3.86     4.04     4.84     4.81     5.07

Senior Securities:

         

Total preferred shares outstanding

    1,028        1,028        1,028        1,028        1,028   

Asset coverage per preferred share(5)

  $ 69,487      $ 75,645      $ 69,295      $ 72,208      $ 73,719   

Involuntary liquidation preference per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(5) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(6) 

Plus accumulated and unpaid dividends.

 

  45   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    Massachusetts Fund  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 15.920      $ 14.230      $ 14.710      $ 14.660      $ 12.130   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.801      $ 0.821      $ 0.876      $ 0.882      $ 0.901   

Net realized and unrealized gain (loss)

    (2.389     1.728        (0.490     0.036        2.486   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.015     (0.019     (0.026     (0.031     (0.099

Total income (loss) from operations

  $ (1.603   $ 2.530      $ 0.360      $ 0.887      $ 3.288   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.787   $ (0.840   $ (0.840   $ (0.837   $ (0.758

Total distributions to common shareholders

  $ (0.787   $ (0.840   $ (0.840   $ (0.837   $ (0.758

Net asset value — End of year (Common shares)

  $ 13.530      $ 15.920      $ 14.230      $ 14.710      $ 14.660   

Market value — End of year (Common shares)

  $ 12.510      $ 16.510      $ 14.320      $ 15.160      $ 15.250   

Total Investment Return on Net Asset Value(2)

    (10.28 )%      18.26     3.06     6.43     28.42

Total Investment Return on Market Value(2)

    (20.01 )%      21.87     0.64     5.44     17.59
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 23,925      $ 28,138      $ 25,134      $ 25,920      $ 25,771   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees

    1.45     1.46     1.54     1.45     1.69

Interest and fee expense(4)

    0.09     0.09     0.11     0.09     0.23

Total expenses before custodian fee reduction

    1.54     1.55     1.65     1.54     1.92

Expenses after custodian fee reduction excluding interest and fees

    1.45     1.46     1.54     1.45     1.68

Net investment income

    5.31     5.44     6.60     6.29     7.41

Portfolio Turnover

    3     2     27     27     43

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees

    0.96     0.97     0.97     0.94     1.03

Interest and fee expense(4)

    0.06     0.06     0.07     0.05     0.14

Total expenses before custodian fee reduction

    1.02     1.03     1.04     0.99     1.17

Expenses after custodian fee reduction excluding interest and fees

    0.96     0.97     0.97     0.94     1.03

Net investment income

    3.52     3.61     4.18     4.06     4.53

Senior Securities:

         

Total preferred shares outstanding

    543        543        543        543        543   

Asset coverage per preferred share(5)

  $ 69,061      $ 76,820      $ 71,288      $ 72,737      $ 72,462   

Involuntary liquidation preference per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(5) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(6) 

Plus accumulated and unpaid dividends.

 

  46   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    Michigan Fund  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 15.030      $ 14.040      $ 14.540      $ 14.730      $ 12.570   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.789      $ 0.862      $ 0.913      $ 0.928      $ 0.925   

Net realized and unrealized gain (loss)

    (1.859     1.038        (0.496     (0.208     2.110   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.017     (0.021     (0.030     (0.036     (0.113

Total income (loss) from operations

  $ (1.087   $ 1.879      $ 0.387      $ 0.684      $ 2.922   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.783   $ (0.889   $ (0.887   $ (0.874   $ (0.762

Total distributions to common shareholders

  $ (0.783   $ (0.889   $ (0.887   $ (0.874   $ (0.762

Net asset value — End of year (Common shares)

  $ 13.160      $ 15.030      $ 14.040      $ 14.540      $ 14.730   

Market value — End of year (Common shares)

  $ 11.790      $ 16.000      $ 13.610      $ 14.430      $ 13.900   

Total Investment Return on Net Asset Value(2)

    (7.29 )%      13.69     3.25     5.16     25.29

Total Investment Return on Market Value(2)

    (21.98 )%      24.85     0.85     10.60     42.90
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 19,931      $ 22,759      $ 21,233      $ 21,985      $ 22,276   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses before custodian fee reduction

    1.55     1.54     1.58     1.49     1.70

Expenses after custodian fee reduction

    1.55     1.54     1.58     1.49     1.69

Net investment income

    5.46     5.90     6.76     6.55     7.30

Portfolio Turnover

    29     19     5     2     9

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses before custodian fee reduction

    0.96     0.96     0.96     0.92     1.00

Expenses after custodian fee reduction

    0.96     0.96     0.96     0.92     1.00

Net investment income

    3.39     3.68     4.09     4.04     4.30

Senior Securities:

         

Total preferred shares outstanding

    533        533        533        533        533   

Asset coverage per preferred share(4)

  $ 62,395      $ 67,701      $ 64,837      $ 66,248      $ 66,794   

Involuntary liquidation preference per preferred share(5)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(5)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(5) 

Plus accumulated and unpaid dividends.

 

  47   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    New Jersey Fund  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 14.640      $ 13.180      $ 14.410      $ 14.620      $ 11.980   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.759      $ 0.820      $ 0.895      $ 0.943      $ 0.926   

Net realized and unrealized gain (loss)

    (1.537     1.471        (1.179     (0.207     2.740   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.015     (0.019     (0.026     (0.031     (0.088

From net realized gain

                                (0.016

Total income (loss) from operations

  $ (0.793   $ 2.272      $ (0.310   $ 0.705      $ 3.562   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.727   $ (0.812   $ (0.920   $ (0.915   $ (0.819

From net realized gain

                                (0.103

Total distributions to common shareholders

  $ (0.727   $ (0.812   $ (0.920   $ (0.915   $ (0.922

Net asset value — End of year (Common shares)

  $ 13.120      $ 14.640      $ 13.180      $ 14.410      $ 14.620   

Market value — End of year (Common shares)

  $ 11.730      $ 15.090      $ 13.370      $ 15.350      $ 14.730   

Total Investment Return on Net Asset Value(2)

    (5.48 )%      17.69     (1.80 )%      5.10     31.84

Total Investment Return on Market Value(2)

    (18.01 )%      19.58     (6.49 )%      11.12     33.95
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 34,221      $ 38,140      $ 34,186      $ 37,222      $ 37,628   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees

    1.35     1.39     1.42     1.36     1.53

Interest and fee expense(4)

    0.04     0.12     0.15     0.17     0.46

Total expenses before custodian fee reduction

    1.39     1.51     1.57     1.53     1.99

Expenses after custodian fee reduction excluding interest and fees

    1.35     1.39     1.41     1.36     1.52

Net investment income

    5.35     5.87     6.96     6.79     7.81

Portfolio Turnover

    11     16     4     8     39

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees

    0.88     0.90     0.90     0.88     0.93

Interest and fee expense(4)

    0.03     0.08     0.09     0.11     0.28

Total expenses before custodian fee reduction

    0.91     0.98     0.99     0.99     1.21

Expenses after custodian fee reduction excluding interest and fees

    0.88     0.90     0.89     0.88     0.92

Net investment income

    3.50     3.81     4.38     4.39     4.75

Senior Securities:

         

Total preferred shares outstanding

    784        784        784        784        784   

Asset coverage per preferred share(5)

  $ 68,650      $ 73,649      $ 68,605      $ 72,478      $ 72,996   

Involuntary liquidation preference per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(5) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(6) 

Plus accumulated and unpaid dividends.

 

  48   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    New York Fund II  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 13.900      $ 12.760      $ 13.400      $ 13.620      $ 11.530   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.714      $ 0.775      $ 0.868      $ 0.847      $ 0.857   

Net realized and unrealized gain (loss)

    (1.537     1.162        (0.621     (0.167     2.087   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.010     (0.013     (0.018     (0.021     (0.066

Total income (loss) from operations

  $ (0.833   $ 1.924      $ 0.229      $ 0.659      $ 2.878   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.687   $ (0.784   $ (0.869   $ (0.879   $ (0.788

Total distributions to common shareholders

  $ (0.687   $ (0.784   $ (0.869   $ (0.879   $ (0.788

Net asset value — End of year (Common shares)

  $ 12.380      $ 13.900      $ 12.760      $ 13.400      $ 13.620   

Market value — End of year (Common shares)

  $ 11.120      $ 13.970      $ 12.890      $ 14.000      $ 13.610   

Total Investment Return on Net Asset Value(2)

    (6.01 )%      15.47     2.16     5.20     26.71

Total Investment Return on Market Value(2)

    (16.01 )%      14.89     (1.21 )%      9.99     37.98
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 31,779      $ 35,669      $ 32,717      $ 34,328      $ 34,847   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees

    1.40     1.42     1.47     1.41     1.51

Interest and fee expense(4)

    0.17     0.22     0.28     0.28     0.63

Total expenses before custodian fee reduction

    1.57     1.64     1.75     1.69     2.14

Expenses after custodian fee reduction excluding interest and fees

    1.40     1.42     1.46     1.41     1.50

Net investment income

    5.33     5.80     7.07     6.49     7.67

Portfolio Turnover

    14     18     17     13     30

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees

    1.01     1.02     1.03     1.01     1.03

Interest and fee expense(4)

    0.12     0.16     0.20     0.20     0.43

Total expenses before custodian fee reduction

    1.13     1.18     1.23     1.21     1.46

Expenses after custodian fee reduction excluding interest and fees

    1.01     1.02     1.02     1.01     1.02

Net investment income

    3.85     4.18     4.98     4.65     5.24

Senior Securities:

         

Total preferred shares outstanding

    530        530        530        530        530   

Asset coverage per preferred share(5)

  $ 84,960      $ 92,301      $ 86,730      $ 89,770      $ 90,749   

Involuntary liquidation preference per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(5) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(6) 

Plus accumulated and unpaid dividends.

 

  49   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    Ohio Fund  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 13.800      $ 12.220      $ 12.960      $ 12.980      $ 11.330   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.736      $ 0.762      $ 0.814      $ 0.828      $ 0.846   

Net realized and unrealized gain (loss)

    (1.584     1.606        (0.759     (0.058     1.592   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.013     (0.016     (0.023     (0.028     (0.101

Total income (loss) from operations

  $ (0.861   $ 2.352      $ 0.032      $ 0.742      $ 2.337   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.719   $ (0.772   $ (0.772   $ (0.762   $ (0.687

Total distributions to common shareholders

  $ (0.719   $ (0.772   $ (0.772   $ (0.762   $ (0.687

Net asset value — End of year (Common shares)

  $ 12.220      $ 13.800      $ 12.220      $ 12.960      $ 12.980   

Market value — End of year (Common shares)

  $ 11.380      $ 15.200      $ 12.780      $ 14.100      $ 13.250   

Total Investment Return on Net Asset Value(2)

    (6.46 )%      19.50     0.65     6.04     22.05

Total Investment Return on Market Value(2)

    (20.91 )%      25.85     (3.25 )%      13.01     25.48
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 30,995      $ 34,985      $ 30,922      $ 32,726      $ 32,710   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees(4)

    1.33     1.35     1.42     1.36     1.57

Interest and fee expense(5)

    0.02     0.01     0.02     0.02     0.10

Total expenses

    1.35     1.36     1.44     1.38     1.67

Net investment income

    5.51     5.83     6.98     6.61     7.87

Portfolio Turnover

    12     12     10     11     18

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees(4)

    0.89     0.89     0.90     0.88     0.95

Interest and fee expense(5)

    0.01     0.01     0.01     0.01     0.06

Total expenses

    0.90     0.90     0.91     0.89     1.01

Net investment income

    3.67     3.85     4.43     4.30     4.77

Senior Securities:

         

Total preferred shares outstanding

    680        680        680        680        680   

Asset coverage per preferred share(6)

  $ 70,581      $ 76,450      $ 70,474      $ 73,128      $ 73,104   

Involuntary liquidation preference per preferred share(7)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(7)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Excludes the effect of custody fee credits, if any, of less than 0.005%.

 

(5) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(6) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(7) 

Plus accumulated and unpaid dividends.

 

  50   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Financial Highlights — continued

 

Selected data for a common share outstanding during the periods stated

 

    Pennsylvania Fund  
    Year Ended September 30,  
     2013     2012     2011     2010     2009  

Net asset value — Beginning of year (Common shares)

  $ 14.460      $ 13.180      $ 13.640      $ 13.900      $ 12.030   
Income (Loss) From Operations                                        

Net investment income(1)

  $ 0.812      $ 0.829      $ 0.893      $ 0.878      $ 0.889   

Net realized and unrealized gain (loss)

    (1.742     1.342        (0.460     (0.270     2.123   

Distributions to preferred shareholders(1)

         

From net investment income

    (0.014     (0.018     (0.025     (0.030     (0.071

From net realized gain

                                (0.045

Total income (loss) from operations

  $ (0.944   $ 2.153      $ 0.408      $ 0.578      $ 2.896   
Less Distributions to Common Shareholders                                        

From net investment income

  $ (0.806   $ (0.873   $ (0.868   $ (0.838   $ (0.753

From net realized gain

                                (0.273

Total distributions to common shareholders

  $ (0.806   $ (0.873   $ (0.868   $ (0.838   $ (1.026

Net asset value — End of year (Common shares)

  $ 12.710      $ 14.460      $ 13.180      $ 13.640      $ 13.900   

Market value — End of year (Common shares)

  $ 11.590      $ 15.780      $ 13.030      $ 14.230      $ 14.600   

Total Investment Return on Net Asset Value(2)

    (6.69 )%      16.76     3.63     4.53     27.36

Total Investment Return on Market Value(2)

    (22.03 )%      28.88     (1.79 )%      3.82     20.09
Ratios/Supplemental Data                                        

Net assets applicable to common shares, end of year (000’s omitted)

  $ 37,619      $ 42,791      $ 38,972      $ 40,256      $ 40,956   

Ratios (as a percentage of average daily net assets applicable to common shares):(3)

         

Expenses excluding interest and fees

    1.35     1.33     1.41     1.36     1.52

Interest and fee expense(4)

    0.06     0.04     0.08     0.07     0.17

Total expenses before custodian fee reduction

    1.41     1.37     1.49     1.43     1.69

Expenses after custodian fee reduction excluding interest and fees

    1.35     1.33     1.40     1.36     1.51

Net investment income

    5.83     5.98     7.19     6.67     7.80

Portfolio Turnover

    14     11     12     19     8

The ratios reported above are based on net assets applicable to common shares. The ratios based on net assets, including amounts related to preferred shares, are as follows:

   

Ratios (as a percentage of average daily net assets applicable to common shares and preferred shares):(3)

         

Expenses excluding interest and fees

    0.88     0.87     0.88     0.87     0.91

Interest and fee expense(4)

    0.04     0.03     0.05     0.05     0.10

Total expenses before custodian fee reduction

    0.92     0.90     0.93     0.92     1.01

Expenses after custodian fee reduction excluding interest and fees

    0.88     0.87     0.88     0.87     0.90

Net investment income

    3.82     3.91     4.51     4.28     4.68

Senior Securities:

         

Total preferred shares outstanding

    869        869        869        869        869   

Asset coverage per preferred share(5)

  $ 68,290      $ 74,242      $ 69,847      $ 71,327      $ 72,133   

Involuntary liquidation preference per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Approximate market value per preferred share(6)

  $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

 

(1) 

Computed using average common shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

(3) 

Ratios do not reflect the effect of dividend payments to preferred shareholders.

 

(4) 

Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 

(5) 

Calculated by subtracting the Fund’s total liabilities (not including the preferred shares) from the Fund’s total assets, and dividing the result by the number of preferred shares outstanding.

 

(6) 

Plus accumulated and unpaid dividends.

 

  51   See Notes to Financial Statements.


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements

 

 

1  Significant Accounting Policies

Eaton Vance Municipal Bond Fund II (Municipal Fund II), Eaton Vance California Municipal Bond Fund II (California Fund II), Eaton Vance Massachusetts Municipal Bond Fund (Massachusetts Fund), Eaton Vance Michigan Municipal Bond Fund (Michigan Fund), Eaton Vance New Jersey Municipal Bond Fund (New Jersey Fund), Eaton Vance New York Municipal Bond Fund II (New York Fund II), Eaton Vance Ohio Municipal Bond Fund (Ohio Fund) and Eaton Vance Pennsylvania Municipal Bond Fund (Pennsylvania Fund), (each individually referred to as the Fund, and collectively, the Funds), are Massachusetts business trusts registered under the Investment Company Act of 1940, as amended (the 1940 Act), as non-diversified, closed-end management investment companies, except for Municipal Fund II, which is a diversified, closed-end management investment company. The Funds’ investment objective is to provide current income exempt from regular federal income tax, including alternative minimum tax, and, in state specific funds, taxes in its specified state.

The following is a summary of significant accounting policies of the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America.

A  Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.

Debt Obligations. Debt obligations (including short-term obligations with a remaining maturity of more than sixty days) are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value.

Derivatives. Financial futures contracts are valued at the closing settlement price established by the board of trade or exchange on which they are traded. Interest rate swaps are normally valued using valuations provided by a third party pricing service. Such pricing service valuations are based on the present value of fixed and projected floating rate cash flows over the term of the swap contract. Future cash flows are discounted to their present value using swap rates provided by electronic data services or by broker/dealers.

Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of a Fund in a manner that fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.

B  Investment Transactions and Related Income — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.

C  Federal Taxes — Each Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its taxable, if any, and tax-exempt net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary. Each Fund intends to satisfy conditions which will enable it to designate distributions from the interest income generated by its investments in non-taxable municipal securities, which are exempt from regular federal income tax when received by each Fund, as exempt-interest dividends.

At September 30, 2013, the following Funds, for federal income tax purposes, had capital loss carryforwards and deferred capital losses which will reduce the respective Fund’s taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Funds of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Funds’ next taxable year and are treated as realized

 

  52  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

prior to the utilization of the capital loss carryforward. The amounts and expiration dates of the capital loss carryforwards and the amounts of the deferred capital losses are as follows:

 

Expiration Date  

Municipal

Fund II

    

California

Fund II

    

Massachusetts

Fund

    

Michigan

Fund

 

September 30, 2016

  $ 658,427       $ 52,500       $       $ 1,883   

September 30, 2017

    2,011,041         1,365,711         94,578           

September 30, 2018

    11,539,291         3,330,399         1,054,999         579,696   

September 30, 2019

    1,277,303         1,539,887         225,669         515,704   

Total capital loss carryforward

  $ 15,486,062       $ 6,288,497       $ 1,375,246       $ 1,097,283   

Deferred capital losses

  $ 7,556,202       $ 5,315,587       $ 1,385,634       $ 162,382   

 

Expiration Date  

New Jersey

Fund

    

New York

Fund II

    

Ohio

Fund

    

Pennsylvania

Fund

 

September 30, 2016

  $       $ 41,818       $ 83,319       $   

September 30, 2017

    244,927         1,233,356         1,620,085           

September 30, 2018

    2,060,337         1,545,637         3,381,936         1,949,047   

September 30, 2019

    1,369,694         1,548,104         669,118         925,899   

Total capital loss carryforward

  $ 3,674,958       $ 4,368,915       $ 5,754,458       $ 2,874,946   

Deferred capital losses

  $ 1,501,196       $ 1,696,957       $ 1,180,207       $ 1,931,731   

As of September 30, 2013, the Funds had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.

D  Expense Reduction — State Street Bank and Trust Company (SSBT) serves as custodian of the Funds. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance each Fund maintains with SSBT. All credit balances, if any, used to reduce each Fund’s custodian fees are reported as a reduction of expenses in the Statements of Operations.

E  Legal Fees — Legal fees and other related expenses incurred as part of negotiations of the terms and requirement of capital infusions, or that are expected to result in the restructuring of, or a plan of reorganization for, an investment are recorded as realized losses. Ongoing expenditures to protect or enhance an investment are treated as operating expenses.

F  Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

G  Indemnifications — Under each Fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to each Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as a Fund) could be deemed to have personal liability for the obligations of the Fund. However, each Fund’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Fund shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, each Fund enters into agreements with service providers that may contain indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against each Fund that have not yet occurred.

H  Floating Rate Notes Issued in Conjunction with Securities Held — The Funds may invest in residual interest bonds, also referred to as inverse floating rate securities, whereby a Fund may sell a variable or fixed rate bond to a broker for cash. At the same time, the Fund buys a residual interest in the assets and cash flows of a Special-Purpose Vehicle (the SPV), (which is generally organized as a trust), set up by the broker. The broker deposits a bond into the SPV with the same CUSIP number as the bond sold to the broker by the Fund, and which may have been, but is not required to be, the bond purchased from the Fund (the Bond). The SPV also issues floating rate notes (Floating Rate Notes) which are sold to third-parties. The residual interest bond held by

 

  53  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

a Fund gives the Fund the right (1) to cause the holders of the Floating Rate Notes to generally tender their notes at par, and (2) to have the broker transfer the Bond held by the SPV to the Fund, thereby terminating the SPV. Should the Fund exercise such right, it would generally pay the broker the par amount due on the Floating Rate Notes and exchange the residual interest bond for the underlying Bond. Pursuant to generally accepted accounting principles for transfers and servicing of financial assets and extinguishment of liabilities, the Funds account for the transaction described above as a secured borrowing by including the Bond in their Portfolio of Investments and the Floating Rate Notes as a liability under the caption “Payable for floating rate notes issued” in their Statement of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date. Accordingly, the fair value of the payable for floating rate notes issued approximates its carrying value. If measured at fair value, the payable for floating rate notes would have been considered as Level 2 in the fair value hierarchy (see Note 10) at September 30, 2013. Interest expense related to the Funds’ liability with respect to Floating Rate Notes is recorded as incurred. The SPV may be terminated by the Fund, as noted above, or by the broker upon the occurrence of certain termination events as defined in the trust agreement, such as a downgrade in the credit quality of the underlying Bond, bankruptcy of or payment failure by the issuer of the underlying Bond, the inability to remarket Floating Rate Notes that have been tendered due to insufficient buyers in the market, or the failure by the SPV to obtain renewal of the liquidity agreement under which liquidity support is provided for the Floating Rate Notes up to one year. Structuring fees paid to the liquidity provider upon the creation of an SPV have been recorded as debt issuance costs and are being amortized as interest expense to the expected maturity of the related trust. Unamortized structuring fees related to a terminated SPV are recorded as a realized loss on extinguishment of debt. At September 30, 2013, the amounts of the Funds’ Floating Rate Notes and related interest rates and collateral were as follows:

 

    

Municipal

Fund II

    

California

Fund II

    

Massachusetts

Fund

 

Floating Rate Notes Outstanding

  $ 41,885,000       $ 9,885,000       $ 3,330,000   

Interest Rate or Range of Interest Rates (%)

    0.07 - 0.27         0.07 - 0.12         0.07 - 0.09   

Collateral for Floating Rate Notes Outstanding

  $ 49,779,953       $ 11,316,366       $ 4,144,046   

 

    

New Jersey

Fund

    

New York

Fund II

    

Ohio

Fund

    

Pennsylvania

Fund

 

Floating Rate Notes Outstanding

  $ 225,000       $ 8,690,000       $ 1,050,000       $ 4,440,000   

Interest Rate or Range of Interest Rates (%)

    0.22         0.07 - 0.09         0.07 - 1.25         0.07 - 1.25   

Collateral for Floating Rate Notes Outstanding

  $ 253,623       $ 10,679,680       $ 1,358,715       $ 5,762,365   

For the year ended September 30, 2013, the Funds’ average Floating Rate Notes outstanding and the average interest rate including fees and amortization of deferred debt issuance costs were as follows:

 

    

Municipal

Fund II

    

California

Fund II

    

Massachusetts

Fund

 

Average Floating Rate Notes Outstanding

  $ 42,242,479       $ 9,885,000       $ 3,330,000   

Average Interest Rate

    0.69      0.68      0.70

 

    

New Jersey

Fund

    

New York

Fund II

    

Ohio

Fund

    

Pennsylvania

Fund

 

Average Floating Rate Notes Outstanding

  $ 1,645,795       $ 8,384,932       $ 613,836       $ 3,177,534   

Average Interest Rate

    0.94      0.68      0.86      0.81

The Funds may enter into shortfall and forbearance agreements with the broker by which a Fund agrees to reimburse the broker, in certain circumstances, for the difference between the liquidation value of the Bond held by the SPV and the liquidation value of the Floating Rate Notes, as well as any shortfalls in interest cash flows. The Funds had no shortfalls as of September 30, 2013.

The Funds may also purchase residual interest bonds from brokers in a secondary market transaction without first owning the underlying bond. Such transactions are not required to be treated as secured borrowings. Shortfall agreements, if any, related to residual interest bonds purchased in a secondary market transaction are disclosed in the Portfolio of Investments.

 

  54  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

The Funds’ investment policies and restrictions expressly permit investments in residual interest bonds. Such bonds typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality and maturity. These securities tend to underperform the market for fixed rate bonds in a rising long-term interest rate environment, but tend to outperform the market for fixed rate bonds when long-term interest rates decline. The value and income of residual interest bonds are generally more volatile than that of a fixed rate bond. The Funds’ investment policies do not allow the Funds to borrow money except as permitted by the 1940 Act. Management believes that the Funds’ restrictions on borrowing money and issuing senior securities (other than as specifically permitted) do not apply to Floating Rate Notes issued by the SPV and included as a liability in the Funds’ Statement of Assets and Liabilities. As secured indebtedness issued by an SPV, Floating Rate Notes are distinct from the borrowings and senior securities to which the Funds’ restrictions apply. Residual interest bonds held by the Funds are securities exempt from registration under Rule 144A of the Securities Act of 1933.

I  Financial Futures Contracts — Upon entering into a financial futures contract, a Fund is required to deposit with the broker, either in cash or securities, an amount equal to a certain percentage of the contract amount (initial margin). Subsequent payments, known as variation margin, are made or received by the Fund each business day, depending on the daily fluctuations in the value of the underlying security, and are recorded as unrealized gains or losses by the Fund. Gains (losses) are realized upon the expiration or closing of the financial futures contracts. Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. Futures contracts have minimal counterparty risk as they are exchange traded and the clearinghouse for the exchange is substituted as the counterparty, guaranteeing counterparty performance.

J  Interest Rate Swaps — Pursuant to interest rate swap agreements, a Fund makes periodic payments at a fixed interest rate and, in exchange, receives payments based on the interest rate of a benchmark industry index. Payments received or made are recorded as realized gains or losses. During the term of the outstanding swap agreement, changes in the underlying value of the swap are recorded as unrealized gains or losses. The value of the swap is determined by changes in the relationship between two rates of interest. A Fund is exposed to credit loss in the event of non-performance by the swap counterparty. Risk may also arise from movements in interest rates.

K  When-Issued Securities and Delayed Delivery Transactions — The Funds may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. At the time the transaction is negotiated, the price of the security that will be delivered is fixed. The Funds maintain security positions for these commitments such that sufficient liquid assets will be available to make payments upon settlement. Securities purchased on a delayed delivery or when-issued basis are marked-to-market daily and begin earning interest on settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.

L  Statement of Cash Flows — The cash amount shown in the Statement of Cash Flows of a Fund is the amount included in the Fund’s Statement of Assets and Liabilities and represents the unrestricted cash on hand at its custodian and does not include any short-term investments.

2  Auction Preferred Shares

Each Fund issued Auction Preferred Shares (APS) on January 15, 2003 in a public offering. The underwriting discounts and other offering costs incurred in connection with the offering were recorded as a reduction of the paid-in capital of the common shares of each respective Fund. Dividends on the APS, which accrue daily, are cumulative at rates which are reset every seven days by an auction, unless a special dividend period has been set. If the APS auctions do not successfully clear, the dividend payment rate over the next period for the APS holders is set at a specified maximum applicable rate until such time as the APS auctions are successful. The maximum applicable rate on the APS is 110% (150% for taxable distributions) of the greater of the 1) “AA” Financial Composite Commercial Paper Rate or 2) Taxable Equivalent of the Short-Term Municipal Obligation Rate on the date of the auction. The stated spread over the reference benchmark rate is determined based on the credit rating of the APS. Series of APS are identical in all respects except for the reset dates of the dividend rates.

The APS are redeemable at the option of each Fund at a redemption price equal to $25,000 per share, plus accumulated and unpaid dividends, on any dividend payment date. The APS are also subject to mandatory redemption at a redemption price equal to $25,000 per share, plus accumulated and unpaid dividends, if a Fund is in default for an extended period on its asset maintenance requirements with respect to the APS. If the dividends on the APS remain unpaid in an amount equal to two full years’ dividends, the holders of the APS as a class have the right to elect a majority of the Board of Trustees. In general, the holders of the APS and the common shares have equal voting rights of one vote per share, except that the holders of the APS, as a separate class, have the right to elect at least two members of the Board of Trustees. The APS have a liquidation preference of $25,000 per share, plus accumulated and unpaid dividends. Each Fund is required to maintain certain asset coverage with respect to the APS as defined in the Funds’ By-laws and the 1940 Act. Each Fund pays an annual fee up to 0.15% of the liquidation value of the APS to broker/dealers as a service fee if the auctions are unsuccessful; otherwise, the annual fee is 0.25%.

3  Distributions to Shareholders

Each Fund intends to make monthly distributions of net investment income to common shareholders, after payment of any dividends on any outstanding APS. In addition, at least annually, each Fund intends to distribute all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards). Distributions to common shareholders are recorded on the ex-dividend date. Distributions to preferred shareholders are recorded daily and

 

  55  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

are payable at the end of each dividend period. The dividend rates for APS at September 30, 2013, and the amount of dividends accrued (including capital gains, if any) to APS shareholders, average APS dividend rates, and dividend rate ranges for the year then ended were as follows:

 

    

Municipal
Fund II

(Series A)

    

Municipal
Fund II

(Series B)

     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

APS Dividend Rates at September 30, 2013

    0.11      0.11      0.11      0.11      0.11

Dividends Accrued to APS Shareholders

  $ 44,757       $ 44,802       $ 51,075       $ 26,566       $ 25,938   

Average APS Dividend Rates

    0.20      0.20      0.20      0.20      0.19

Dividend Rate Ranges (%)

    0.08 - 0.38         0.08 - 0.38         0.08 - 0.38         0.08 - 0.38         0.08 - 0.38   

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

APS Dividend Rates at September 30, 2013

    0.11      0.11      0.11      0.11

Dividends Accrued to APS Shareholders

  $ 38,265       $ 25,993       $ 34,076       $ 42,842   

Average APS Dividend Rates

    0.20      0.20      0.20      0.20

Dividend Rate Ranges (%)

    0.08 - 0.38         0.08 - 0.38         0.08 - 0.38         0.08 - 0.38   

Beginning February 13, 2008 and consistent with the patterns in the broader market for auction-rate securities, the Funds’ APS auctions were unsuccessful in clearing due to an imbalance of sell orders over bids to buy the APS. As a result, the dividend rates of the APS were reset to the maximum applicable rates. The table above reflects such maximum dividend rates for each series as of September 30, 2013.

The Funds distinguish between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.

The tax character of distributions declared for the years ended September 30, 2013 and September 30, 2012 was as follows:

 

    Year Ended September 30, 2013  
     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Distributions declared from:

          

Tax-exempt income

  $ 7,664,820       $ 2,967,749       $ 1,417,670       $ 1,202,842   

Ordinary income

  $ 8,512       $ 804       $       $ 8,824   

 

    Year Ended September 30, 2013  
     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Distributions declared from:

          

Tax-exempt income

  $ 1,913,486       $ 1,789,259       $ 1,856,790       $ 2,428,835   

Ordinary income

  $ 20,070       $ 46       $ 2,005       $ 347   

 

  56  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

 

    Year Ended September 30, 2012  
     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Distributions declared from:

          

Tax-exempt income

  $ 8,837,775       $ 3,139,020       $ 1,516,786       $ 1,377,492   

Ordinary income

  $ 10,796       $ 4,392       $       $   

 

    Year Ended September 30, 2012  
     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Distributions declared from:

          

Tax-exempt income

  $ 2,158,297       $ 2,042,548       $ 1,996,065       $ 2,634,314   

Ordinary income

  $       $ 747       $ 592       $   

During the year ended September 30, 2013, the following amounts were reclassified due to expired capital loss carryforwards and differences between book and tax accounting, primarily for accretion of market discount.

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Change in:

          

Paid-in capital

  $       $       $ (179,329    $ (384,407

Accumulated net realized loss

  $ 12,232       $ 13,076       $ 186,117       $ 381,679   

Accumulated undistributed (distributions in excess of) net investment income

  $ (12,232    $ (13,076    $ (6,788    $ 2,728   

 

     New Jersey
Fund
     New York
Fund II
    

Ohio

Fund

     Pennsylvania
Fund
 

Change in:

          

Paid-in capital

  $       $       $ (321,979    $   

Accumulated net realized loss

  $ 1,915       $ 15,486       $ 364,343       $ 22,605   

Accumulated undistributed net investment income

  $ (1,915    $ (15,486    $ (42,364    $ (22,605

These reclassifications had no effect on the net assets or net asset value per share of the Funds.

As of September 30, 2013, the components of distributable earnings (accumulated losses) and unrealized appreciation (depreciation) on a tax basis were as follows:

 

    

Municipal

Fund II

    

California

Fund II

    

Massachusetts

Fund

    

Michigan

Fund

 

Undistributed tax-exempt income

  $ 248,126       $ 66,829       $ 67,526       $ 47,703   

Capital loss carryforward and deferred capital losses

  $ (23,042,264    $ (11,604,084    $ (2,760,880    $ (1,259,665

Net unrealized appreciation (depreciation)

  $ (581,458    $ 2,213,703       $ 1,721,880       $ 67,124   

Other temporary differences

  $ (562    $ (403    $ (171    $ (251

 

 

  57  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

    

New Jersey

Fund

    

New York

Fund II

    

Ohio

Fund

     Pennsylvania
Fund
 

Undistributed tax-exempt income

  $ 135,547       $ 76,358       $ 68,824       $ 157,740   

Capital loss carryforward and deferred capital losses

  $ (5,176,154    $ (6,065,872    $ (6,934,665    $ (4,806,677

Net unrealized appreciation

  $ 2,280,784       $ 1,387,657       $ 2,250,136       $ 309,928   

Other temporary differences

  $ (431    $ (250    $ (160    $ (273

The differences between components of distributable earnings (accumulated losses) on a tax basis and the amounts reflected in the Statements of Assets and Liabilities are primarily due to wash sales, the timing of recognizing distributions to shareholders, futures contracts, accretion of market discount, expenditures on defaulted bonds and residual interest bonds.

4  Investment Adviser Fee and Other Transactions with Affiliates

The investment adviser fee is earned by Eaton Vance Management (EVM) as compensation for investment advisory services rendered to each Fund. The fee is computed at an annual rate of 0.55% of each Fund’s average weekly gross assets and is payable monthly. Average weekly gross assets include the principal amount of any indebtedness for money borrowed, including debt securities issued by a Fund, and the amount of any outstanding APS issued by the Fund. Pursuant to a fee reduction agreement with EVM, average weekly gross assets are calculated by adding to net assets the liquidation value of a Fund’s APS then outstanding and the amount payable by the Fund to floating rate note holders, such adjustment being limited to the value of the APS outstanding prior to any APS redemptions by the Fund. EVM also serves as the administrator of each Fund, but receives no compensation. For the year ended September 30, 2013, the investment adviser fees were as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Investment Adviser Fee

  $ 1,190,165       $ 462,910       $ 232,201       $ 193,706   

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Investment Adviser Fee

  $ 321,684       $ 310,113       $ 283,468       $ 362,713   

Trustees and officers of the Funds who are members of EVM’s organization receive remuneration for their services to the Funds out of the investment adviser fee. Trustees of the Funds who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the year ended September 30, 2013, no significant amounts have been deferred. Certain officers and Trustees of the Funds are officers of EVM.

5  Purchases and Sales of Investments

Purchases and sales of investments, other than short-term obligations, for the year ended September 30, 2013 were as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Purchases

  $ 15,213,823       $ 5,922,980       $ 1,130,240       $ 10,196,472   

Sales

  $ 15,752,434       $ 8,178,303       $ 1,434,984       $ 9,949,820   

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Purchases

  $ 6,155,925       $ 7,351,888       $ 6,238,783       $ 11,739,592   

Sales

  $ 10,598,825       $ 8,844,328       $ 6,119,127       $ 9,126,988   

 

  58  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

6  Common Shares of Beneficial Interest

Common shares issued pursuant to the Funds’ dividend reinvestment plan for the years ended September 30, 2013 and September 30, 2012 were as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Year Ended September 30, 2013

    6,020         1,517         692         144   

Year Ended September 30, 2012

    17,109         2,340         2,043         1,181   

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Year Ended September 30, 2013

    3,216         760         2,095         1,153   

Year Ended September 30, 2012

    11,044         2,145         4,058         2,539   

7  Federal Income Tax Basis of Investments

The cost and unrealized appreciation (depreciation) of investments of each Fund at September 30, 2013, as determined on a federal income tax basis, were as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Aggregate cost

  $ 161,551,682       $ 66,221,933       $ 34,615,712       $ 32,862,209   

Gross unrealized appreciation

  $ 8,742,290       $ 3,920,410       $ 2,103,176       $ 1,459,560   

Gross unrealized depreciation

    (9,323,748      (1,706,707      (381,296      (1,392,436

Net unrealized appreciation (depreciation)

  $ (581,458    $ 2,213,703       $ 1,721,880       $ 67,124   

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Aggregate cost

  $ 50,232,265       $ 41,482,910       $ 44,617,199       $ 58,207,774   

Gross unrealized appreciation

  $ 2,926,055       $ 2,436,827       $ 3,363,472       $ 2,233,191   

Gross unrealized depreciation

    (645,271      (1,049,170      (1,113,336      (1,923,263

Net unrealized appreciation

  $ 2,280,784       $ 1,387,657       $ 2,250,136       $ 309,928   

8  Overdraft Advances

Pursuant to the custodian agreement, SSBT may, in its discretion, advance funds to the Funds to make properly authorized payments. When such payments result in an overdraft, the Funds are obligated to repay SSBT at the current rate of interest charged by SSBT for secured loans (currently, the Federal Funds rate plus 2%). This obligation is payable on demand to SSBT. SSBT has a lien on a Fund’s assets to the extent of any overdraft. At September 30, 2013, Municipal Fund II, Michigan Fund and Pennsylvania Fund had payments due to SSBT pursuant to the foregoing arrangement of $23,111, $375,584 and $30,013, respectively. Based on the short-term nature of these payments and the variable interest rate, the carrying value of the overdraft advances approximated its fair value at September 30, 2013. If measured at fair value, overdraft advances would have been considered as Level 2 in the fair value hierarchy (see Note 10) at September 30, 2013. The Funds’ average overdraft advances during the year ended September 30, 2013 were not significant.

 

  59  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

9  Financial Instruments

The Funds may trade in financial instruments with off-balance sheet risk in the normal course of their investing activities. These financial instruments may include financial futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment a Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered.

A summary of obligations under these financial instruments at September 30, 2013 is as follows:

 

Futures Contracts  
Fund   Expiration
Month/Year
   Contracts    Position    Aggregate
Cost
     Value      Net
Unrealized
Depreciation
 
Municipal II   12/13    58
U.S. Long Treasury Bond
   Short    $ (7,642,753    $ (7,735,750    $ (92,997
California II   12/13    20
U.S. 10-Year Treasury Note
   Short    $ (2,477,933    $ (2,527,813    $ (49,880
    12/13    23
U.S. Long Treasury Bond
   Short      (3,030,747      (3,067,625      (36,878
Massachusetts   12/13    14
U.S. Long Treasury Bond
   Short    $ (1,844,803    $ (1,867,250    $ (22,447
Michigan   12/13    7
U.S. Long Treasury Bond
   Short    $ (915,682    $ (933,625    $ (17,943
New Jersey   12/13    60
U.S. Long Treasury Bond
   Short    $ (7,906,296    $ (8,002,500    $ (96,204
New York II   12/13    22
U.S. Long Treasury Bond
   Short    $ (2,898,975    $ (2,934,250    $ (35,275
Ohio   12/13    22
U.S. Long Treasury Bond
   Short    $ (2,883,858    $ (2,934,250    $ (50,392
Pennsylvania   12/13    55
U.S. Long Treasury Bond
   Short    $ (7,247,438    $ (7,335,625    $ (88,187

At September 30, 2013, the Funds had sufficient cash and/or securities to cover commitments under these contracts.

Each Fund is subject to interest rate risk in the normal course of pursuing its investment objective. Because the Funds hold fixed-rate bonds, the value of these bonds may decrease if interest rates rise. The Funds purchase and sell U.S. Treasury futures contracts to hedge against changes in interest rates.

The fair values of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is interest rate risk at September 30, 2013 were as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Liability Derivative:

       

Futures Contracts

  $ (92,997 )(1)     $ (86,758 )(1)     $ (22,447 )(1)     $ (17,943 )(1) 

Total

  $ (92,997    $ (86,758    $ (22,447    $ (17,943

 

  60  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Liability Derivative:

       

Futures Contracts

  $ (96,204 )(1)     $ (35,275 )(1)     $ (50,392 )(1)     $ (88,187 )(1) 

Total

  $ (96,204    $ (35,275    $ (50,392    $ (88,187

 

(1) 

Amount represents cumulative unrealized depreciation on futures contracts in the Futures Contracts table above. Only the current day’s variation margin on open futures contracts is reported within the Statement of Assets and Liabilities as Receivable or Payable for variation margin, as applicable.

The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is interest rate risk for the year ended September 30, 2013 was as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Realized Gain (Loss) on Derivatives Recognized in Income

  $ 737,918 (1)     $ 389,889 (1)     $ 178,439 (1)     $ 38,916 (1) 

Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

  $ (85,711 )(2)     $ (77,997 )(2)     $ (27,562 )(2)     $ (13,344 )(2) 

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Realized Gain (Loss) on Derivatives Recognized in Income

  $ 945,637 (1)     $ 280,403 (1)     $ 206,506 (1)     $ 733,039 (1) 

Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

  $ (123,606 )(2)     $ (43,313 )(2)     $ (56,238 )(2)     $ (110,108 )(2) 

 

(1) 

Statement of Operations location: Net realized gain (loss) – Financial futures contracts.

 

(2) 

Statement of Operations location: Change in unrealized appreciation (depreciation) – Financial futures contracts.

The average notional amounts of futures contracts outstanding during the year ended September 30, 2013, which are indicative of the volume of this derivative type, were approximately as follows:

 

     Municipal
Fund II
     California
Fund II
     Massachusetts
Fund
     Michigan
Fund
 

Average Notional Amount:

    

Futures Contracts

  $ 6,546,000       $ 4,838,000       $ 1,400,000       $ 523,000   

 

     New Jersey
Fund
     New York
Fund II
     Ohio
Fund
     Pennsylvania
Fund
 

Average Notional Amount:

    

Futures Contracts

  $ 7,231,000       $ 2,200,000       $ 1,892,000       $ 5,808,000   

10  Fair Value Measurements

Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

 

Ÿ  

Level 1 – quoted prices in active markets for identical investments

 

Ÿ  

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

  61  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

 

Ÿ  

Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)

In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

At September 30, 2013, the hierarchy of inputs used in valuing the Funds’ investments and open derivative instruments, which are carried at value, were as follows:

 

Municipal Fund II

 
Asset Description   Level 1      Level 2      Level 3*      Total  

Tax-Exempt Municipal Securities

  $       $ 202,826,027       $       $ 202,826,027   

Corporate Bonds & Notes

                    29,197         29,197   

Total Investments

  $       $ 202,826,027       $ 29,197       $ 202,855,224   

Liability Description

                                  

Futures Contracts

  $ (92,997    $       $       $ (92,997

Total

  $ (92,997    $       $       $ (92,997
          

California Fund II

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Investments

  $       $ 78,320,636       $       $ 78,320,636   

Total Investments

  $       $ 78,320,636       $       $ 78,320,636   

Liability Description

                                  

Futures Contracts

  $ (86,758    $       $       $ (86,758

Total

  $ (86,758    $       $       $ (86,758
          

Massachusetts Fund

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Investments

  $       $ 39,667,592       $       $ 39,667,592   

Total Investments

  $       $ 39,667,592       $       $ 39,667,592   

Liability Description

                                  

Futures Contracts

  $ (22,447    $       $       $ (22,447

Total

  $ (22,447    $       $       $ (22,447
          

 

  62  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

Michigan Fund

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Investments

  $       $ 32,929,333       $            —       $ 32,929,333   

Total Investments

  $       $ 32,929,333       $       $ 32,929,333   

Liability Description

                                  

Futures Contracts

  $ (17,943    $       $       $ (17,943

Total

  $ (17,943    $       $       $ (17,943
          

New Jersey Fund

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Municipal Securities

  $       $ 52,314,469       $       $ 52,314,469   

Taxable Municipal Securities

            423,580                 423,580   

Total Investments

  $       $ 52,738,049       $       $ 52,738,049   

Liability Description

                                  

Futures Contracts

  $ (96,204    $       $       $ (96,204

Total

  $ (96,204    $       $       $ (96,204
          

New York Fund II

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Investments

  $       $ 51,560,567       $       $ 51,560,567   

Total Investments

  $       $ 51,560,567       $       $ 51,560,567   

Liability Description

                                  

Futures Contracts

  $ (35,275    $       $       $ (35,275

Total

  $ (35,275    $       $       $ (35,275
          

Ohio Fund

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Investments

  $       $ 47,917,335       $       $ 47,917,335   

Total Investments

  $       $ 47,917,335       $       $ 47,917,335   

Liability Description

                                  

Futures Contracts

  $ (50,392    $       $       $ (50,392

Total

  $ (50,392    $       $       $ (50,392
          

 

  63  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Notes to Financial Statements — continued

 

 

Pennsylvania Fund

 
Asset Description   Level 1      Level 2      Level 3      Total  

Tax-Exempt Investments

  $       $ 62,957,702       $            —       $ 62,957,702   

Total Investments

  $       $ 62,957,702       $       $ 62,957,702   

Liability Description

                                  

Futures Contracts

  $ (88,187    $       $       $ (88,187

Total

  $ (88,187    $       $       $ (88,187

 

* None of the unobservable inputs for Level 3 assets, individually or collectively, had a material impact on the Fund.

The California Fund II, Massachusetts Fund, Michigan Fund, New Jersey Fund, New York Fund II, Ohio Fund and Pennsylvania Fund held no investments or other financial instruments as of September 30, 2012 whose fair value was determined using Level 3 inputs.

Level 3 investments held by Municipal Fund II at the beginning and/or end of the period in relation to net assets were not significant and accordingly, a reconciliation of Level 3 assets for the year ended September 30, 2013 is not presented.

At September 30, 2013, there were no investments transferred between Level 1 and Level 2 during the year then ended.

 

  64  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Report of Independent Registered Public Accounting Firm

 

 

To the Trustees and Shareholders of Eaton Vance Municipal Bond Fund II, Eaton Vance California Municipal Bond Fund II, Eaton Vance Massachusetts Municipal Bond Fund, Eaton Vance Michigan Municipal Bond Fund, Eaton Vance New Jersey Municipal Bond Fund, Eaton Vance New York Municipal Bond Fund II, Eaton Vance Ohio Municipal Bond Fund, and Eaton Vance Pennsylvania Municipal Bond Fund:

We have audited the accompanying statements of assets and liabilities of Eaton Vance Municipal Bond Fund II, Eaton Vance California Municipal Bond Fund II, Eaton Vance Massachusetts Municipal Bond Fund, Eaton Vance Michigan Municipal Bond Fund, Eaton Vance New Jersey Municipal Bond Fund, Eaton Vance New York Municipal Bond Fund II, Eaton Vance Ohio Municipal Bond Fund, and Eaton Vance Pennsylvania Municipal Bond Fund (collectively, the “Funds”) including the portfolios of investments, as of September 30, 2013, and the related statements of operations for the year then ended, the statements of cash flows of Eaton Vance Municipal Bond Fund II, Eaton Vance California Municipal Bond Fund II, and Eaton Vance New York Municipal Bond Fund II for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2013 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Eaton Vance Municipal Bond Fund II, Eaton Vance California Municipal Bond Fund II, Eaton Vance Massachusetts Municipal Bond Fund, Eaton Vance Michigan Municipal Bond Fund, Eaton Vance New Jersey Municipal Bond Fund, Eaton Vance New York Municipal Bond Fund II, Eaton Vance Ohio Municipal Bond Fund, and Eaton Vance Pennsylvania Municipal Bond Fund as of September 30, 2013, the results of their operations for the year then ended, the cash flows of Eaton Vance Municipal Bond Fund II, Eaton Vance California Municipal Bond Fund II, and Eaton Vance New York Municipal Bond Fund II for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

November 15, 2013

 

  65  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Federal Tax Information (Unaudited)

 

 

The Form 1099-DIV you receive in January 2014 will show the tax status of all distributions paid to your account in calendar year 2013. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Funds. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding exempt-interest dividends.

Exempt-Interest Dividends.  The Funds designate the following percentages of distributions as exempt-interest dividends:

 

Eaton Vance Municipal Bond Fund II

    99.89

Eaton Vance California Municipal Bond Fund II

    99.97

Eaton Vance Massachusetts Municipal Bond Fund

    100.00

Eaton Vance Michigan Municipal Bond Fund

    99.27

Eaton Vance New Jersey Municipal Bond Fund

    98.96

Eaton Vance New York Municipal Bond Fund II

    100.00

Eaton Vance Ohio Municipal Bond Fund

    99.89

Eaton Vance Pennsylvania Municipal Bond Fund

    99.99

 

  66  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Annual Meeting of Shareholders (Unaudited)

 

 

Each Fund held its Annual Meeting of Shareholders on July 19, 2013. Scott E. Eston, Thomas E. Faust Jr. and Allen R. Freedman were elected Class II Trustees of each Fund for a three-year term expiring in 2016. Mr. Esty was nominated for election by the holders of each Fund’s APS. Due to a lack of quorum of APS, each Fund was unable to act on the election of Mr. Esty. Accordingly, Mr. Esty will remain in office and continue to serve as Trustee of each Fund until his successor is duly elected and qualified.

 

    

Nominee for Class II Trustee

Elected by APS Shareholders:

Benjamin C. Esty

    

Nominee for Class II Trustee

Elected by All Shareholders:

Scott E. Eston

    

Nominee for Class II Trustee

Elected by All Shareholders:

Thomas E. Faust Jr.

    

Nominee for Class IITrustee

Elected by All Shareholders:

Allen R. Freedman

 

Municipal Fund II

          

For

    315         9,055,700         9,056,548         8,978,864   

Withheld

    65         315,629         314,781         392,465   

California Fund II

          

For

    62         3,417,343         3,417,343         3,416,671   

Withheld

    0         81,145         81,145         81,817   

Massachusetts Fund

          

For

    58         1,601,865         1,601,865         1,615,117   

Withheld

    33         35,145         35,145         21,893   

Michigan Fund

          

For

    191         1,424,724         1,422,654         1,420,695   

Withheld

    1         30,540         32,610         34,569   

New Jersey Fund

          

For

    102         2,363,609         2,363,599         2,363,609   

Withheld

    3         115,170         115,180         115,170   

New York Fund II

          

For

    89         2,334,288         2,334,288         2,334,288   

Withheld

    25         59,958         59,958         59,958   

Ohio Fund

          

For

    88         2,301,441         2,301,441         2,213,058   

Withheld

    17         73,110         73,110         161,493   

Pennsylvania Fund

          

For

    329         2,676,013         2,676,780         2,652,663   

Withheld

    4         53,646         52,879         76,996   

 

  67  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Dividend Reinvestment Plan

 

 

Each Fund offers a dividend reinvestment plan (Plan) pursuant to which shareholders may elect to have distributions automatically reinvested in common shares (Shares) of the Fund. You may elect to participate in the Plan by completing the Dividend Reinvestment Plan Application Form. If you do not participate, you will receive all distributions in cash paid by check mailed directly to you by American Stock Transfer & Trust Company (AST) as dividend paying agent. On the distribution payment date, if the NAV per Share is equal to or less than the market price per Share plus estimated brokerage commissions, then new Shares will be issued. The number of Shares shall be determined by the greater of the NAV per Share or 95% of the market price. Otherwise, Shares generally will be purchased on the open market by AST, the Plan agent (Agent). Distributions subject to income tax (if any) are taxable whether or not Shares are reinvested.

If your Shares are in the name of a brokerage firm, bank, or other nominee, you can ask the firm or nominee to participate in the Plan on your behalf. If the nominee does not offer the Plan, you will need to request that the Fund’s transfer agent re-register your Shares in your name or you will not be able to participate.

The Agent’s service fee for handling distributions will be paid by the Fund. Plan participants will be charged their pro rata share of brokerage commissions on all open-market purchases.

Plan participants may withdraw from the Plan at any time by writing to the Agent at the address noted on the following page. If you withdraw, you will receive Shares in your name for all Shares credited to your account under the Plan. If a participant elects by written notice to the Agent to sell part or all of his or her Shares and remit the proceeds, the Agent is authorized to deduct a $5.00 fee plus brokerage commissions from the proceeds.

If you wish to participate in the Plan and your Shares are held in your own name, you may complete the form on the following page and deliver it to the Agent. Any inquiries regarding the Plan can be directed to the Agent at 1-866-439-6787.

 

  68  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Application for Participation in Dividend Reinvestment Plan

 

 

 

This form is for shareholders who hold their common shares in their own names. If your common shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it will participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank, or nominee is unable to participate on your behalf, you should request that your common shares be re-registered in your own name which will enable your participation in the Plan.

The following authorization and appointment is given with the understanding that I may terminate it at any time by terminating my participation in the Plan as provided in the terms and conditions of the Plan.

 

 

Please print exact name on account

 

Shareholder signature                                                           Date

 

Shareholder signature                                                           Date

Please sign exactly as your common shares are registered. All persons whose names appear on the share certificate must sign.

YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO RECEIVE YOUR DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.

This authorization form, when signed, should be mailed to the following address:

Eaton Vance Municipal Bond Funds

c/o American Stock Transfer & Trust Company

P.O. Box 922

Wall Street Station

New York, NY 10269-0560

 

 

Number of Employees

Each Fund is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company, and has no employees.

Number of Shareholders

As of September 30, 2013, Fund records indicate that there are 17, 5, 3, 5, 6, 12, 6 and 26 registered shareholders for Municipal Fund II, California Fund II, Massachusetts Fund, Michigan Fund, New Jersey Fund, New York Fund II, Ohio Fund and Pennsylvania Fund, respectively, and approximately 3,900, 1,276, 862, 899, 1,189, 1,116, 1,400 and 1,602 shareholders owning the Fund shares in street name, such as through brokers, banks and financial intermediaries for Municipal Fund II, California Fund II, Massachusetts Fund, Michigan Fund, New Jersey Fund, New York Fund II, Ohio Fund and Pennsylvania Fund, respectively.

If you are a street name shareholder and wish to receive Fund reports directly, which contain important information about a Fund, please write or call:

Eaton Vance Distributors, Inc.

Two International Place

Boston, MA 02110

1-800-262-1122

NYSE MKT symbols

 

Municipal Bond Fund II    EIV
California Municipal Bond Fund II    EIA
Massachusetts Municipal Bond Fund    MAB
Michigan Municipal Bond Fund    MIW
New Jersey Municipal Bond Fund    EMJ
New York Municipal Bond Fund II    NYH
Ohio Municipal Bond Fund    EIO
Pennsylvania Municipal Bond Fund    EIP
 

 

  69  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Board of Trustees’ Contract Approval

 

 

Overview of the Contract Review Process

The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.

At a meeting of the Boards of Trustees (each a “Board”) of the Eaton Vance group of mutual funds (the “Eaton Vance Funds”) held on April 23, 2013, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Contract Review Committee of the Board, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2013, as well as information considered during prior meetings of the committee. Such information included, among other things, the following:

Information about Fees, Performance and Expenses

 

Ÿ  

An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds;

 

Ÿ  

An independent report comparing each fund’s total expense ratio and its components to comparable funds;

 

Ÿ  

An independent report comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods;

 

Ÿ  

Data regarding investment performance in comparison to benchmark indices and customized peer groups, in each case as approved by the Board with respect to the funds;

 

Ÿ  

For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund;

 

Ÿ  

Profitability analyses for each adviser with respect to each fund;

Information about Portfolio Management and Trading

 

Ÿ  

Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed, and any changes in portfolio management processes and personnel;

 

Ÿ  

Information about the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and the fund’s policies with respect to “soft dollar” arrangements;

 

Ÿ  

Data relating to portfolio turnover rates of each fund;

 

Ÿ  

The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes;

 

Ÿ  

Information about each adviser’s processes for monitoring best execution of portfolio transactions, and other policies and practices of each adviser with respect to trading;

Information about each Adviser

 

Ÿ  

Reports detailing the financial results and condition of each adviser;

 

Ÿ  

Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts;

 

Ÿ  

Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes;

 

Ÿ  

Copies of or descriptions of each adviser’s policies and procedures relating to proxy voting, the handling of corporate actions and class actions;

 

Ÿ  

Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions;

 

Ÿ  

Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates;

 

Ÿ  

A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;

 

  70  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Board of Trustees’ Contract Approval — continued

 

 

Other Relevant Information

 

Ÿ  

Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates;

 

Ÿ  

Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and

 

Ÿ  

The terms of each advisory agreement.

In addition to the information identified above, the Contract Review Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve-month period ended April 30, 2013, with respect to one or more funds, the Board met eight times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met eight, twenty-one, five, nine and thirteen times respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each adviser relating to each fund. The Board and its Committees considered the investment and trading strategies used in pursuing each fund’s investment objective, including, where relevant, the use of derivative instruments, as well as processes for monitoring best execution of portfolio transactions and risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters.

For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.

The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each advisory and sub-advisory agreement.

Results of the Process

Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreements of the following funds:

 

Ÿ  

Eaton Vance Municipal Bond Fund II

 

Ÿ  

Eaton Vance California Municipal Bond Fund II

 

Ÿ  

Eaton Vance Massachusetts Municipal Bond Fund

 

Ÿ  

Eaton Vance Michigan Municipal Bond Fund

 

Ÿ  

Eaton Vance New Jersey Municipal Bond Fund

 

Ÿ  

Eaton Vance New York Municipal Bond Fund II

 

Ÿ  

Eaton Vance Ohio Municipal Bond Fund

 

Ÿ  

Eaton Vance Pennsylvania Municipal Bond Fund

(the “Funds”), each with Eaton Vance Management (the “Adviser”), including their fee structures, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of each agreement. The Board accepted the recommendation of the Contract Review Committee as well as the factors considered and conclusions reached by the Contract Review Committee with respect to each agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for each Fund.

Nature, Extent and Quality of Services

In considering whether to approve the investment advisory agreements of the Funds, the Board evaluated the nature, extent and quality of services provided to the Funds by the Adviser.

The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by each Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Funds. In particular, the Board considered, where relevant, the abilities and experience of such investment personnel in analyzing factors such as credit risk, tax efficiency, and special considerations relevant to investing in municipal bonds. The Board considered the Adviser’s large municipal bond team, which includes portfolio managers and credit specialists who provide services to the Funds. The Board also took into account the

 

  71  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Board of Trustees’ Contract Approval — continued

 

 

resources dedicated to portfolio management and other services, including the compensation methods of the Adviser to recruit and retain investment personnel, and the time and attention devoted to each Fund by senior management.

The Board reviewed the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.

The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large family of funds.

After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreements.

Fund Performance

The Board compared each Fund’s investment performance to a relevant universe of similarly managed funds identified by an independent data provider and appropriate benchmark indices and, where relevant, a customized peer group of similarly managed funds approved by the Board, and assessed each Fund’s performance on the basis of total return and current income return. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2012 for each Fund. The Board considered the impact of extraordinary market conditions in recent years on each Fund’s performance in light of, among other things, the Adviser’s efforts to generate competitive levels of tax exempt current income over time through investments that, relative to its peer universe, focus on higher quality municipal bonds with longer maturities. The Board noted that the Adviser had taken action to restructure each Fund’s portfolio as part of a long-term strategy for managing interest rate risk, consistent with each Fund’s objective of providing current income. The Board concluded that each Fund’s performance had been satisfactory on the basis of current income return, and that it was appropriate to continue to monitor the effectiveness of the actions taken by the Adviser to improve Fund performance on the basis of total return, which the Board noted had improved for periods ended as of December 31, 2012.

Management Fees and Expenses

The Board reviewed contractual investment advisory fee rates payable by each Fund (referred to as “management fees”). As part of its review, the Board considered the management fees and each Fund’s total expense ratio for the year ended September 30, 2012, as compared to a group of similarly managed funds selected by an independent data provider. The Board also considered factors that had an impact on Fund expense ratios, as identified by management in response to inquiries from the Contract Review Committee, as well as actions taken by management in recent years to reduce expenses at the Eaton Vance fund complex level, including the negotiation of reduced fees for transfer agency and custody services.

After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.

Profitability

The Board reviewed the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to each Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to revenue sharing or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser and its affiliates in connection with their relationships with the Funds, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Funds and other investment advisory clients.

The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are reasonable.

Economies of Scale

In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and each Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of each Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of each Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of each Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that each Fund currently shares in the benefits from economies of scale. The Board also considered the fact that the Funds are not continuously offered and that the Funds’ assets are not expected to increase materially in the foreseeable future. The Board concluded that, in light of the level of the Adviser’s profits with respect to the Fund, the implementation of breakpoints in the advisory fee schedules is not appropriate at this time.

 

  72  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Management and Organization

 

 

Fund Management.  The Trustees and officers of Eaton Vance Municipal Bond Fund II (EIV), Eaton Vance California Municipal Bond Fund II (EIA), Eaton Vance Massachusetts Municipal Bond Fund (MAB), Eaton Vance Michigan Municipal Bond Fund (MIW), Eaton Vance New Jersey Municipal Bond Fund (EMJ), Eaton Vance New York Municipal Bond Fund II (NYH), Eaton Vance Ohio Municipal Bond Fund (EIO), and Eaton Vance Pennsylvania Municipal Bond Fund (EIP) (the Funds) are responsible for the overall management and supervision of the Funds’ affairs. The Trustees and officers of the Funds 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 Funds, as that term is defined under the 1940 Act. The business address of each Trustee and officer is Two International Place, Boston, Massachusetts 02110. As used below, “EVC” refers to Eaton Vance Corp., “EV” refers to Eaton Vance, Inc., “EVM” refers to Eaton Vance Management, “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 EVM and BMR. EVD is a wholly-owned subsidiary of EVC. Each officer affiliated with Eaton Vance may hold a position with other Eaton Vance affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 190 portfolios in the Eaton Vance Complex (including all master and feeder funds in a master feeder structure). Each officer serves as an officer of certain other Eaton Vance funds. Each Trustee serves for a three year term. Each officer serves until his or her successor is elected.

 

Name and Year of Birth   

Position(s)

with the
Funds

    

Term of Office;

Length of
Service

    

Principal Occupation(s) and Directorships

During Past Five Years and Other Relevant Experience

Interested Trustee

            

Thomas E. Faust Jr.

1958

  

Class II

Trustee

    

Until 2016.

3 years.

Trustee since 2007.

    

Chairman, Chief Executive Officer and President of EVC, Director and President of EV, Chief Executive Officer and President of EVM and BMR, and Director of EVD. Trustee and/or officer of 190 registered investment companies. Mr. Faust is an interested person because of his positions with EVM, BMR, EVD, EVC and EV, which are affiliates of the Funds.

Directorships in the Last Five Years.(1) Director of EVC and Hexavest Inc.

            

Noninterested Trustees

            

Scott E. Eston

1956

  

Class II

Trustee

    

Until 2016.

3 years.

Trustee since 2011.

    

Private investor. Formerly held various positions at Grantham, Mayo, Van Otterloo and Co., L.L.C. (investment management firm) (1997-2009), including Chief Operating Officer (2002-2009), Chief Financial Officer (1997-2009) and Chairman of the Executive Committee (2002-2008); President and Principal Executive Officer, GMO Trust (open-end registered investment company) (2006-2009). Former Partner, Coopers and Lybrand L.L.P. (now PricewaterhouseCoopers) (public accounting firm) (1987-1997).

Directorships in the Last Five Years. None.

Benjamin C. Esty(A)

1963

   Class II Trustee     

Until 2013.

3 years.

Trustee since 2005.

    

Roy and Elizabeth Simmons Professor of Business Administration and Finance Unit Head, Harvard University Graduate School of Business Administration.

Directorships in the Last Five Years.(1) None.

Allen R. Freedman

1940

   Class II Trustee     

Until 2016.

3 years.

Trustee since 2007.

    

Private Investor. Former Chairman (2002-2004) and a Director (1983-2004) of Systems & Computer Technology Corp. (provider of software to higher education). Formerly, a Director of Loring Ward International (fund distributor) (2005-2007). Former Chairman and a Director of Indus International, Inc. (provider of enterprise management software to the power generating industry) (2005-2007). Former Chief Executive Officer of Assurant, Inc. (insurance provider) (1979-2000).

Directorships in the Last Five Years.(1) Director of Stonemor Partners, L.P. (owner and operator of cemeteries). Formerly, Director of Assurant, Inc. (insurance provider) (1979-2011).

William H. Park

1947

  

Class I

Trustee

    

Until 2015.

3 years.

Trustee since 2003.

    

Consultant and private investor. Formerly, Chief Financial Officer, Aveon Group L.P. (investment management firm) (2010-2011). Formerly, Vice Chairman, Commercial Industrial Finance Corp. (specialty finance company) (2006-2010). Formerly, President and Chief Executive Officer, Prizm Capital Management, LLC (investment management firm) (2002-2005). Formerly, Executive Vice President and Chief Financial Officer, United Asset Management Corporation (investment management firm) (1982-2001). Formerly, Senior Manager, Price Waterhouse (now PricewaterhouseCoopers) (an independent registered public accounting firm) (1972-1981).

Directorships in the Last Five Years.(1) None.

 

  73  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Management and Organization — continued

 

 

Name and Year of Birth   

Position(s)

with the
Funds

    

Term of Office;

Length of
Service

    

Principal Occupation(s) and Directorships

During Past Five Years and Other Relevant Experience

Noninterested Trustees (continued)

         

Ronald A. Pearlman

1940

  

Class III

Trustee

    

Until 2014.

3 years.

Trustee since 2003.

    

Professor of Law, Georgetown University Law Center. Formerly, Deputy Assistant Secretary (Tax Policy) and Assistant Secretary (Tax Policy), U.S. Department of the Treasury (1983-1985). Formerly, Chief of Staff, Joint Committee on Taxation, U.S. Congress (1988-1990).

Directorships in the Last Five Years.(1) None.

Helen Frame Peters

1948

  

Class III

Trustee

    

Until 2014.

3 years.

Trustee since 2008.

    

Professor of Finance, Carroll School of Management, Boston College. Formerly, Dean, Carroll School of Management, Boston College (2000-2002). Formerly, Chief Investment Officer, Fixed Income, Scudder Kemper Investments (investment management firm) (1998-1999). Formerly, Chief Investment Officer, Equity and Fixed Income, Colonial Management Associates (investment management firm) (1991-1998).

Directorships in the Last Five Years.(1) Formerly, Director of BJ’s Wholesale Club, Inc. (wholesale club retailer) (2004-2011). Formerly, Trustee of SPDR Index Shares Funds and SPDR Series Trust (exchange traded funds) (2000-2009). Formerly, Director of Federal Home Loan Bank of Boston (a bank for banks) (2007-2009).

Lynn A. Stout

1957

  

Class I

Trustee

    

Until 2015.

3 years.

Trustee since 2002.

    

Distinguished Professor of Corporate and Business Law, Jack G. Clarke Business Law Institute, Cornell University Law School. Formerly, the Paul Hastings Professor of Corporate and Securities Law (2006-2012) and Professor of Law (2001-2006), University of California at Los Angeles School of Law.

Directorships in the Last Five Years.(1) None.

Harriett Tee Taggart

1948

  

Class III

Trustee

    

Until 2014.

2 years.

Trustee since 2011.

    

Managing Director, Taggart Associates (a professional practice firm). Formerly, Partner and Senior Vice President, Wellington Management Company, LLP (investment management firm) (1983-2006).

Directorships in the Last Five Years. Director of Albemarle Corporation (chemicals manufacturer) (since 2007) and The Hanover Group (specialty property and casualty insurance company) (since 2009). Formerly, Director of Lubrizol Corporation (specialty chemicals) (2007-2011).

Ralph F. Verni(A)

1943

  

Chairman of the Board and

Class I

Trustee

    

Until 2015.

3 years.

Chairman of the Board since 2007 and Trustee since 2005.

    

Consultant and private investor. Formerly, Chief Investment Officer (1982-1992), Chief Financial Officer (1988-1990) and Director (1982-1992), New England Life. Formerly, Chairperson, New England Mutual Funds (1982-1992). Formerly, President and Chief Executive Officer, State Street Management & Research (1992-2000). Formerly, Chairperson, State Street Research Mutual Funds (1992-2000). Formerly, Director, W.P. Carey, LLC (1998-2004) and First Pioneer Farm Credit Corp. (2002-2006).

Directorships in the Last Five Years.(1) None.

            

Principal Officers who are not Trustees

Name and Year of Birth   

Position(s)

with the

Funds

    

Length of

Service

    

Principal Occupation(s)

During Past Five Years

Cynthia J. Clemson

1963

   President of EIA, MIW, NYH, EIO and EIP      Since 2005      Vice President of EVM and BMR.

Thomas M. Metzold

1958

  

President of MAB, EIV

and EMJ

     Since 2010      Vice President of EVM and BMR.

Payson F. Swaffield

1956

   Vice President      Since 2011      Vice President and Chief Income Investment Officer of EVM and BMR.

Maureen A. Gemma

1960

   Vice President, Secretary and Chief Legal Officer      Vice President since 2011, Secretary since 2007 and Chief Legal Officer since 2008      Vice President of EVM and BMR.

 

  74  


Eaton Vance

Municipal Bond Funds

September 30, 2013

 

Management and Organization — continued

 

 

Name and Year of Birth   

Position(s)

with the

Funds

    

Length of

Service

    

Principal Occupation(s)

During Past Five Years

Principal Officers who are not Trustees (continued)

    

James F. Kirchner(2)

1967

   Treasurer      Since 2013      Vice President of EVM and BMR.

Paul M. O’Neil

1953

   Chief Compliance Officer      Since 2004      Vice President of EVM and BMR.

 

(1) 

During their respective tenures, the Trustees (except Mr. Eston and Ms. Taggart) also served as Board members of one or more of the following Eaton Vance funds (which operated in the years noted): Eaton Vance Credit Opportunities Fund (launched in 2005 and terminated in 2010); Eaton Vance Insured Florida Plus Municipal Bond Fund (launched in 2002 and terminated in 2009); and Eaton Vance National Municipal Income Trust (launched in 1998 and terminated in 2009).

(2) 

Prior to 2013, Mr. Kirchner served as Assistant Treasurer of the Funds since 2007.

(A) 

APS Trustee.

 

  75  


Eaton Vance Funds

 

IMPORTANT NOTICES

 

 

Privacy.  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:

 

Ÿ  

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.

 

Ÿ  

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.

 

Ÿ  

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

 

Ÿ  

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, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only 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 advisor/broker-dealer, it is likely that only such advisor’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.

Delivery of Shareholder Documents.  The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will be effective within 30 days of receipt by Eaton Vance or your financial advisor.

Portfolio Holdings.  Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).

Proxy Voting.  From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.

Share Repurchase Program.  On November 11, 2013, the Funds’ Board of Trustees approved a share repurchase program authorizing each Fund to repurchase up to 10% of its currently outstanding common shares in open-market transactions at a discount to net asset value. The repurchase program does not obligate a Fund to purchase a specific amount of shares. The Funds’ repurchase activity, including the number of shares purchased, average price and average discount to net asset value, will be disclosed in the Funds’ annual and semi-annual reports to shareholders.

Additional Notice to Shareholders.  If applicable, a Fund may also redeem or purchase its outstanding auction preferred shares (APS) in order to maintain compliance with regulatory requirements, borrowing or rating agency requirements or for other purposes as it deems appropriate or necessary.

Closed-End Fund Information.  Eaton Vance closed-end funds make fund performance data and certain information about portfolio characteristics available on the Eaton Vance website shortly after the end of each month. The funds’ net asset value per share is readily accessible on the Eaton Vance website. Portfolio holdings for the most recent month-end are also posted to the website approximately 30 days following the end of the month. This information is available at www.eatonvance.com on the fund information pages under “Individual Investors — Closed-End Funds”.

 

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Investment Adviser and Administrator

Eaton Vance Management

Two International Place

Boston, MA 02110

Custodian

State Street Bank and Trust Company

200 Clarendon Street

Boston, MA 02116

Transfer Agent

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, NY 10038

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

200 Berkeley Street

Boston, MA 02116-5022

Fund Offices

Two International Place

Boston, MA 02110

 


LOGO

 

1557-11/13   CE-8IMBIISRC


Item 2. Code of Ethics

The registrant has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122.

 

Item 3. Audit Committee Financial Expert

The registrant’s Board has designated William H. Park, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is a consultant and private investor. Previously, he served as the Chief Financial Officer of Aveon Group, L.P. (an investment management firm), as the Vice Chairman of Commercial Industrial Finance Corp. (specialty finance company), as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm), as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (an institutional investment management firm) and as a Senior Manager at Price Waterhouse (now PricewaterhouseCoopers) (an independent registered public accounting firm).


Item 4. Principal Accountant Fees and Services

(a) –(d)

The following table presents the aggregate fees billed to the registrant for the registrant’s fiscal years ended September 30, 2012 and September 30, 2013 by the registrant’s principal accountant, Deloitte & Touche LLP (“D&T”), for professional services rendered for the audit of the registrant’s annual financial statements and fees billed for other services rendered by D&T during such periods.

 

Fiscal Years Ended

     9/30/12        9/30/13  

Audit Fees

     $ 28,130         $ 28,980   

Audit-Related Fees(1)

     $ 3,915         $ 3,915   

Tax Fees(2)

     $ 8,700         $ 9,110   

All Other Fees(3)

     $ 310         $ 0   

Total

     $ 41,055         $ 42,005   

 

(1)  Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under the category of audit fees and specifically include fees for the performance of certain agreed-upon procedures relating to the registrant’s auction preferred shares.

 

(2)  Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation and other related tax compliance/planning matters.

 

(3)  All other fees consist of the aggregate fees billed for products and services provided by the principal accountant other than audit, audit-related, and tax services.

(e)(1) The registrant’s audit committee has adopted policies and procedures relating to the pre-approval of services provided by the registrant’s principal accountant (the “Pre-Approval Policies”). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the audit committee.

The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant’s audit committee at least annually. The registrant’s audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant’s principal accountant.


(e)(2) No services described in paragraphs (b)-(d) above were approved by the registrant’s audit committee pursuant to the “de minimis exception” set forth in Rule 2-01 (c)(7)(i)(C) of Regulation S-X.

 

(f) Not applicable.

(g) The following table presents (i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the registrant by D&T for the registrant’s fiscal years ended September 30, 2012 and September 30, 2013; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the Eaton Vance organization by D&T for the same time periods.

 

Fiscal Years Ended

     9/30/12        9/30/13  

Registrant

     $ 12,925         $ 13,025   

Eaton Vance(1)

     $ 606,619         $ 369,820   

 

(1)  The investment adviser to the registrant, as well as any of its affiliates that provide ongoing services to the registrant, are subsidiaries of Eaton Vance Corp.

(h) The registrant’s audit committee has considered whether the provision by the registrant’s principal accountant of non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5. Audit Committee of Listed Registrants

The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934, as amended. William H. Park (Chair), Scott E. Eston, Ronald A. Pearlman, Helen Frame Peters and Ralph F. Verni are the members of the registrant’s audit committee.

 

Item 6. Schedule of Investments

Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

The Board of Trustees of the Trust has adopted a proxy voting policy and procedure (the “Fund Policy”), pursuant to which the Trustees have delegated proxy voting responsibility to the Fund’s investment adviser and adopted the investment adviser’s proxy voting policies and procedures (the “Policies”) which are described below. 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 investment adviser, the administrator, or any of their affiliates or any affiliate of the Fund, the investment adviser will generally refrain from voting the proxies related to the companies giving rise to such conflict until it consults with the Board’s Special Committee except as contemplated under the Fund Policy. The Board’s Special Committee will instruct the investment adviser on the appropriate course of action.


The Policies are designed to promote accountability of a company’s management to its shareholders and to align the interests of management with those shareholders. An independent proxy voting service (“Agent”), currently Institutional Shareholder Services, Inc., has been retained to assist in the voting of proxies through the provision of vote analysis, implementation and recordkeeping and disclosure services. The investment adviser will generally vote proxies through the Agent. The Agent is required to vote all proxies and/or refer them back to the investment adviser pursuant to the Policies. It is generally the policy of the investment adviser to vote in accordance with the recommendation of the Agent. The Agent shall refer to the investment adviser proxies relating to mergers and restructurings, and the disposition of assets, termination, liquidation and mergers contained in mutual fund proxies. The investment adviser 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. The investment adviser generally supports management on social and environmental proposals. The investment adviser may abstain from voting from time to time where it determines that the costs associated with voting a proxy outweighs the benefits derived from exercising the right to vote or the economic effect on shareholders interests or the value of the portfolio holding is indeterminable or insignificant.

In addition, the investment adviser will monitor situations that may result in a conflict of interest between the Fund’s shareholders and the investment adviser, the administrator, or any of their affiliates or any affiliate of the Fund by maintaining a list of significant existing and prospective corporate clients. The investment adviser’s personnel responsible for reviewing and voting proxies on behalf of the Fund will report any proxy received or expected to be received from a company included on that list to the personnel of the investment adviser identified in the Policies. If such personnel expects to instruct the Agent to vote such proxies in a manner inconsistent with the guidelines of the Policies or the recommendation of the Agent, the personnel will consult with members of senior management of the investment adviser to determine if a material conflict of interests exists. If it is determined that a material conflict does exist, the investment adviser will seek instruction on how to vote from the Special Committee.

Information on how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is 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.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Portfolio Management

Cynthia J. Clemson, portfolio manager of Eaton Vance California Municipal Bond Fund II, William H. Ahern, Jr., portfolio manager of Eaton Vance Michigan Municipal Bond Fund, Eaton Vance Municipal Bond Fund II and Eaton Vance Ohio Municipal Bond Fund, Craig R. Brandon, portfolio manager of Eaton Vance Massachusetts Municipal Bond Fund and Eaton Vance New York Municipal Bond Fund II and Adam A. Weigold, portfolio manager of Eaton Vance New Jersey Municipal Bond Fund and Eaton Vance Pennsylvania Municipal Bond Fund are responsible for the overall and day-to-day management of each Fund’s investments.

Ms. Clemson has been an Eaton Vance portfolio manager since 1991 and is a Vice President of Eaton Vance Management (“EVM”) and Boston Management and Research (“BMR”). Mr. Ahern has been an Eaton Vance portfolio manager since 1993 and is a Vice President of EVM and BMR. Mr. Brandon has been an Eaton Vance analyst since 1998 and a portfolio manager since 2004, and is a Vice President of EVM and BMR. Mr. Weigold has been a credit analyst with Eaton Vance since 1991 and a portfolio manager since 2007, and is a Vice President of EVM and BMR. This information is provided as of the date of filing of this report.


The following tables show, as of each Fund’s most recent fiscal year end, the number of accounts each portfolio manager managed in each of the listed categories and the total assets (in millions of dollars) 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 millions of dollars) in those accounts.

 

     Number
of All
Accounts
     Total Assets
of All
Accounts
     Number of
Accounts

Paying a
Performance Fee
   Total Assets of
Accounts Paying a
Performance Fee

Cynthia J. Clemson

           

Registered Investment Companies

     11       $ 2,676.3       0    $0

Other Pooled Investment Vehicles

     0       $ 0       0    $0

Other Accounts

     0       $ 0       0    $0

William H. Ahern, Jr.

           

Registered Investment Companies

     14       $ 3,157.7       0    $0

Other Pooled Investment Vehicles

     0       $ 0       0    $0

Other Accounts

     0       $ 0       0    $0

Craig R. Brandon

           

Registered Investment Companies

     15       $ 1,788.6       0    $0

Other Pooled Investment Vehicles

     0       $ 0       0    $0

Other Accounts

     0       $ 0       0    $0

Adam A. Weigold

           

Registered Investment Companies

     14       $ 1,370.7       0    $0

Other Pooled Investment Vehicles

     0       $ 0       0    $0

Other Accounts

     0       $ 0       0    $0


The following table shows the dollar range of Fund shares beneficially owned by each portfolio manager as of each Fund’s most recent fiscal year end.

 

    

Dollar Range of Equity Securities

Owned in the Fund

California Municipal Bond Fund II

  

Cynthia J. Clemson

   None

Michigan Municipal Bond Fund

  

Municipal Bond Fund II

  

Ohio Municipal Bond Fund

  

William H. Ahern, Jr.

   None

Massachusetts Municipal Bond Fund

  

New York Municipal Bond Fund II

  

Craig R. Brandon

   None

New Jersey Municipal Bond Fund

  

Pennsylvania Municipal Bond Fund

  

Adam A. Weigold

   None

Potential for Conflicts of Interest. It is possible that conflicts of interest may arise in connection with a portfolio manager’s management of a Fund’s investments on the one hand and investments of other accounts for which a portfolio manager is responsible 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 or she advises. In addition, due to differences in the investment strategies or restrictions between a 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 a portfolio manager in the allocation of management time, resources and investment opportunities. Whenever conflicts of interest arise, a portfolio manager will endeavor to exercise his or her discretion in a manner that he or she believes is equitable to all interested persons. EVM has adopted several policies and procedures designed to address these potential conflicts including a code of ethics and policies which govern the investment adviser’s trading practices, including among other things the aggregation and allocation of trades among clients, brokerage allocation, cross trades and best execution.

Compensation Structure for EVM

Compensation of EVM’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. EVM’s investment professionals also receive certain retirement, insurance and other benefits that are broadly available to EVM’s employees. Compensation of EVM’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.


Method to Determine Compensation. EVM 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 the benchmark(s) stated in the prospectus, as well as an appropriate peer group (as described below). In addition to rankings within peer groups of funds on the basis of absolute performance, consideration may also be given to relative risk-adjusted performance. Risk-adjusted performance measures include, but are not limited to, the Sharpe Ratio. Performance is normally based on periods ending on the September 30th preceding fiscal year end. Fund performance is normally evaluated primarily versus peer groups of funds as determined by Lipper Inc. and/or Morningstar, Inc. When a fund’s peer group as determined by Lipper or Morningstar is deemed by EVM’s management not to provide a fair comparison, performance may instead be evaluated primarily against a custom peer group or market index. 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. 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.

EVM seeks to compensate portfolio managers commensurate with their responsibilities and performance, and competitive with other firms within the investment management industry. EVM 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 EVM 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 EVM’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.

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

No such purchases this period.

 

Item 10. Submission of Matters to a Vote of Security Holders

No material changes.

 

Item 11. Controls and Procedures

(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable


assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

(b) There have been no changes in the registrant’s internal controls over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12. Exhibits

 

(a)(1)   Registrant’s Code of Ethics – Not applicable (please see Item 2).
(a)(2)(i)   Treasurer’s Section 302 certification.
(a)(2)(ii)   President’s Section 302 certification.
(b)   Combined Section 906 certification.

 

 


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Eaton Vance Pennsylvania Municipal Bond Fund

 

By:    /s/ Cynthia J. Clemson
   Cynthia J. Clemson
   President

Date: November 7, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:    /s/ James F. Kirchner
   James F. Kirchner
   Treasurer

Date: November 7, 2013

 

By:    /s/ Cynthia J. Clemson
   Cynthia J. Clemson
   President

Date: November 7, 2013