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: 811-08134
Eaton Vance Municipals Trust II
(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)
(617) 482-8260
(Registrants Telephone Number)
January 31
Date of Fiscal Year End
January 31, 2015
Date of Reporting Period
Item 1. Reports to Stockholders
Eaton Vance High Yield Municipal Income Fund
Annual Report January 31, 2015 |
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. The Fund has claimed an exclusion from the definition of the term commodity pool operator under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Funds adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
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.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Annual Report January 31, 2015
Eaton Vance
High Yield Municipal Income Fund
Table of Contents
Managements Discussion of Fund Performance |
2 | |||
Performance |
3 | |||
Fund Profile |
4 | |||
Endnotes and Additional Disclosures |
5 | |||
Fund Expenses |
6 | |||
Financial Statements |
7 | |||
Report of Independent Registered Public Accounting Firm |
30 | |||
Federal Tax Information |
31 | |||
Management and Organization |
32 | |||
Important Notices |
35 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Managements Discussion of Fund Performance1
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Performance2,3
Portfolio Managers Thomas M. Metzold, CFA and Cynthia J. Clemson
% Average Annual Total Returns | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Ten Years | |||||||||||||||
Class A at NAV |
08/07/1995 | 08/07/1995 | 16.92 | % | 8.28 | % | 4.38 | % | ||||||||||||
Class A with 4.75% Maximum Sales Charge |
| | 11.40 | 7.24 | 3.87 | |||||||||||||||
Class B at NAV |
08/07/1995 | 08/07/1995 | 16.11 | 7.46 | 3.60 | |||||||||||||||
Class B with 5% Maximum Sales Charge |
| | 11.11 | 7.16 | 3.60 | |||||||||||||||
Class C at NAV |
06/18/1997 | 08/07/1995 | 16.08 | 7.46 | 3.59 | |||||||||||||||
Class C with 1% Maximum Sales Charge |
| | 15.08 | 7.46 | 3.59 | |||||||||||||||
Class I at NAV |
05/09/2007 | 08/07/1995 | 17.21 | 8.51 | 4.56 | |||||||||||||||
Barclays Municipal Bond Index |
| | 8.86 | % | 5.42 | % | 4.82 | % | ||||||||||||
Barclays High Yield Long (22+) Municipal Bond Index |
| | 15.81 | 10.30 | 5.97 | |||||||||||||||
% Total Annual Operating Expense Ratios4 | Class A | Class B | Class C | Class I | ||||||||||||||||
Gross |
0.97 | % | 1.72 | % | 1.72 | % | 0.72 | % | ||||||||||||
Net |
0.87 | 1.62 | 1.62 | 0.62 | ||||||||||||||||
% Distribution Rates/Yields5 | Class A | Class B | Class C | Class I | ||||||||||||||||
Distribution Rate |
3.93 | % | 3.23 | % | 3.17 | % | 4.19 | % | ||||||||||||
Taxable-Equivalent Distribution Rate |
6.94 | 5.71 | 5.60 | 7.40 | ||||||||||||||||
SEC 30-day Yield |
2.66 | 2.11 | 2.05 | 3.04 | ||||||||||||||||
Taxable-Equivalent SEC 30-day Yield |
4.70 | 3.73 | 3.62 | 5.37 | ||||||||||||||||
% Total Leverage6 | ||||||||||||||||||||
Residual Interest Bond (RIB) Financing |
7.24 | % |
Growth of $10,000
This graph shows the change in value of a hypothetical investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge | ||||||||||||
Class B |
$ | 10,000 | 01/31/2005 | $ | 14,245 | N.A. | ||||||||||
Class C |
$ | 10,000 | 01/31/2005 | $ | 14,235 | N.A. | ||||||||||
Class I |
$ | 250,000 | 01/31/2005 | $ | 390,701 | N.A. |
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
3 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Fund Profile
See Endnotes and Additional Disclosures in this report.
4 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Endnotes and Additional Disclosures
5 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2014 January 31, 2015).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (8/1/14) |
Ending Account Value (1/31/15) |
Expenses Paid During Period* (8/1/14 1/31/15) |
Annualized Expense Ratio |
|||||||||||||
Actual |
|
|||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,079.10 | $ | 4.51 | 0.86 | % | ||||||||
Class B |
$ | 1,000.00 | $ | 1,075.30 | $ | 8.42 | 1.61 | % | ||||||||
Class C |
$ | 1,000.00 | $ | 1,074.60 | $ | 8.42 | 1.61 | % | ||||||||
Class I |
$ | 1,000.00 | $ | 1,079.20 | $ | 3.20 | 0.61 | % | ||||||||
Hypothetical |
|
|||||||||||||||
(5% return per year before expenses) |
|
|||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,020.90 | $ | 4.38 | 0.86 | % | ||||||||
Class B |
$ | 1,000.00 | $ | 1,017.10 | $ | 8.19 | 1.61 | % | ||||||||
Class C |
$ | 1,000.00 | $ | 1,017.10 | $ | 8.19 | 1.61 | % | ||||||||
Class I |
$ | 1,000.00 | $ | 1,022.10 | $ | 3.11 | 0.61 | % |
* | Expenses are equal to the Funds annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on July 31, 2014. |
6 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments
7 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
8 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
9 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
10 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
11 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
12 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
13 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Portfolio of Investments continued
14 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Statement of Assets and Liabilities
Assets | January 31, 2015 | |||
Investments, at value (identified cost, $1,078,111,063) |
$ | 1,156,014,825 | ||
Cash |
15,151,197 | |||
Restricted cash* |
815,000 | |||
Interest receivable |
11,436,153 | |||
Receivable for investments sold |
1,076,962 | |||
Receivable for Fund shares sold |
4,944,480 | |||
Total assets |
$ | 1,189,438,617 | ||
Liabilities | ||||
Payable for floating rate notes issued |
$ | 83,165,000 | ||
Payable for when-issued securities |
31,297,778 | |||
Payable for variation margin on open financial futures contracts |
267,321 | |||
Payable for Fund shares redeemed |
8,328,078 | |||
Distributions payable |
606,207 | |||
Payable to affiliates: |
||||
Investment adviser fee |
388,455 | |||
Distribution and service fees |
261,540 | |||
Interest expense and fees payable |
135,507 | |||
Accrued expenses |
193,424 | |||
Total liabilities |
$ | 124,643,310 | ||
Net Assets |
$ | 1,064,795,307 | ||
Sources of Net Assets | ||||
Paid-in capital |
$ | 1,222,888,586 | ||
Accumulated net realized loss |
(235,379,843 | ) | ||
Accumulated undistributed net investment income |
2,010,245 | |||
Net unrealized appreciation |
75,276,319 | |||
Net Assets |
$ | 1,064,795,307 | ||
Class A Shares | ||||
Net Assets |
$ | 452,134,726 | ||
Shares Outstanding |
50,147,462 | |||
Net Asset Value and Redemption Price Per Share |
||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 9.02 | ||
Maximum Offering Price Per Share |
||||
(100 ÷ 95.25 of net asset value per share) |
$ | 9.47 | ||
Class B Shares | ||||
Net Assets |
$ | 5,435,720 | ||
Shares Outstanding |
604,901 | |||
Net Asset Value and Offering Price Per Share** |
||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 8.99 | ||
Class C Shares | ||||
Net Assets |
$ | 197,654,952 | ||
Shares Outstanding |
23,688,745 | |||
Net Asset Value and Offering Price Per Share** |
||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 8.34 | ||
Class I Shares | ||||
Net Assets |
$ | 409,569,909 | ||
Shares Outstanding |
45,382,746 | |||
Net Asset Value, Offering Price and Redemption Price Per Share |
||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 9.02 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Represents restricted cash on deposit at the broker for open financial futures contracts. |
** | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
15 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Statement of Operations
Investment Income | Year Ended January 31, 2015 |
|||
Interest |
$ | 43,730,429 | ||
Total investment income |
$ | 43,730,429 | ||
Expenses | ||||
Investment adviser fee |
$ | 3,858,672 | ||
Distribution and service fees |
||||
Class A |
982,312 | |||
Class B |
64,559 | |||
Class C |
1,635,951 | |||
Trustees fees and expenses |
42,463 | |||
Custodian fee |
188,882 | |||
Transfer and dividend disbursing agent fees |
284,203 | |||
Legal and accounting services |
130,199 | |||
Printing and postage |
54,429 | |||
Registration fees |
118,743 | |||
Interest expense and fees |
528,652 | |||
Miscellaneous |
103,937 | |||
Total expenses |
$ | 7,993,002 | ||
Deduct |
||||
Reduction of custodian fee |
$ | 5,508 | ||
Total expense reductions |
$ | 5,508 | ||
Net expenses |
$ | 7,987,494 | ||
Net investment income |
$ | 35,742,935 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) |
||||
Investment transactions |
$ | 13,533,333 | ||
Financial futures contracts |
(3,416,811 | ) | ||
Net realized gain |
$ | 10,116,522 | ||
Change in unrealized appreciation (depreciation) |
||||
Investments |
$ | 83,389,134 | ||
Financial futures contracts |
(1,969,308 | ) | ||
Net change in unrealized appreciation (depreciation) |
$ | 81,419,826 | ||
Net realized and unrealized gain |
$ | 91,536,348 | ||
Net increase in net assets from operations |
$ | 127,279,283 |
16 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Statements of Changes in Net Assets
Year Ended January 31, | ||||||||
Increase (Decrease) in Net Assets | 2015 | 2014 | ||||||
From operations |
||||||||
Net investment income |
$ | 35,742,935 | $ | 33,830,482 | ||||
Net realized gain (loss) from investment transactions and financial futures contracts |
10,116,522 | (8,740,827 | ) | |||||
Net change in unrealized appreciation (depreciation) from investments and financial futures contracts |
81,419,826 | (56,166,518 | ) | |||||
Net increase (decrease) in net assets from operations |
$ | 127,279,283 | $ | (31,076,863 | ) | |||
Distributions to shareholders |
||||||||
From net investment income |
||||||||
Class A |
$ | (17,701,564 | ) | $ | (18,874,542 | ) | ||
Class B |
(246,633 | ) | (465,366 | ) | ||||
Class C |
(6,130,362 | ) | (6,189,643 | ) | ||||
Class I |
(12,417,780 | ) | (7,832,647 | ) | ||||
Total distributions to shareholders |
$ | (36,496,339 | ) | $ | (33,362,198 | ) | ||
Transactions in shares of beneficial interest |
||||||||
Proceeds from sale of shares |
||||||||
Class A |
$ | 199,587,741 | $ | 124,021,642 | ||||
Class B |
219,079 | 329,554 | ||||||
Class C |
79,329,214 | 33,729,305 | ||||||
Class I |
336,887,102 | 82,629,192 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared |
||||||||
Class A |
15,067,934 | 16,013,864 | ||||||
Class B |
202,345 | 380,493 | ||||||
Class C |
4,550,229 | 4,779,673 | ||||||
Class I |
9,998,773 | 6,375,947 | ||||||
Cost of shares redeemed |
||||||||
Class A |
(132,740,225 | ) | (193,901,445 | ) | ||||
Class B |
(1,666,286 | ) | (3,545,060 | ) | ||||
Class C |
(34,159,112 | ) | (61,035,122 | ) | ||||
Class I |
(107,243,545 | ) | (94,902,900 | ) | ||||
Net asset value of shares exchanged |
||||||||
Class A |
1,678,675 | 3,337,591 | ||||||
Class B |
(1,678,675 | ) | (3,337,591 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions |
$ | 370,033,249 | $ | (85,124,857 | ) | |||
Net increase (decrease) in net assets |
$ | 460,816,193 | $ | (149,563,918 | ) | |||
Net Assets | ||||||||
At beginning of year |
$ | 603,979,114 | $ | 753,543,032 | ||||
At end of year |
$ | 1,064,795,307 | $ | 603,979,114 | ||||
Accumulated undistributed net investment income included in net assets |
||||||||
At end of year |
$ | 2,010,245 | $ | 2,010,245 |
17 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Financial Highlights
Class A | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 8.070 | $ | 8.830 | $ | 8.340 | $ | 7.410 | $ | 7.900 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income(1) |
$ | 0.378 | $ | 0.432 | $ | 0.434 | $ | 0.491 | $ | 0.472 | ||||||||||
Net realized and unrealized gain (loss) |
0.960 | (0.766 | ) | 0.481 | 0.894 | (0.479 | ) | |||||||||||||
Total income (loss) from operations |
$ | 1.338 | $ | (0.334 | ) | $ | 0.915 | $ | 1.385 | $ | (0.007 | ) | ||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.388 | ) | $ | (0.426 | ) | $ | (0.425 | ) | $ | (0.455 | ) | $ | (0.483 | ) | |||||
Total distributions |
$ | (0.388 | ) | $ | (0.426 | ) | $ | (0.425 | ) | $ | (0.455 | ) | $ | (0.483 | ) | |||||
Net asset value End of year |
$ | 9.020 | $ | 8.070 | $ | 8.830 | $ | 8.340 | $ | 7.410 | ||||||||||
Total Return(2) |
16.92 | % | (3.75 | )% | 11.23 | % | 19.34 | % | (0.35 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 452,135 | $ | 325,548 | $ | 411,671 | $ | 376,496 | $ | 361,171 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses excluding interest and fees(3) |
0.83 | % | 0.87 | % | 0.86 | % | 0.93 | % | 0.99 | % | ||||||||||
Interest and fee expense(4) |
0.06 | % | 0.10 | % | 0.10 | % | 0.11 | % | 0.12 | % | ||||||||||
Total expenses(3) |
0.89 | % | 0.97 | % | 0.96 | % | 1.04 | % | 1.11 | % | ||||||||||
Net investment income |
4.41 | % | 5.22 | % | 5.05 | % | 6.35 | % | 5.90 | % | ||||||||||
Portfolio Turnover |
16 | % | 30 | % | 22 | % | 19 | % | 12 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(4) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1I). |
18 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Financial Highlights continued
Class B | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 8.040 | $ | 8.800 | $ | 8.310 | $ | 7.390 | $ | 7.880 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income(1) |
$ | 0.318 | $ | 0.369 | $ | 0.370 | $ | 0.433 | $ | 0.410 | ||||||||||
Net realized and unrealized gain (loss) |
0.955 | (0.766 | ) | 0.479 | 0.883 | (0.477 | ) | |||||||||||||
Total income (loss) from operations |
$ | 1.273 | $ | (0.397 | ) | $ | 0.849 | $ | 1.316 | $ | (0.067 | ) | ||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.323 | ) | $ | (0.363 | ) | $ | (0.359 | ) | $ | (0.396 | ) | $ | (0.423 | ) | |||||
Total distributions |
$ | (0.323 | ) | $ | (0.363 | ) | $ | (0.359 | ) | $ | (0.396 | ) | $ | (0.423 | ) | |||||
Net asset value End of year |
$ | 8.990 | $ | 8.040 | $ | 8.800 | $ | 8.310 | $ | 7.390 | ||||||||||
Total Return(2) |
16.11 | % | (4.50 | )% | 10.42 | % | 18.35 | % | (1.09 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 5,436 | $ | 7,633 | $ | 14,919 | $ | 22,973 | $ | 31,380 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses excluding interest and fees(3) |
1.58 | % | 1.62 | % | 1.62 | % | 1.68 | % | 1.74 | % | ||||||||||
Interest and fee expense(4) |
0.06 | % | 0.10 | % | 0.10 | % | 0.11 | % | 0.12 | % | ||||||||||
Total expenses(3) |
1.64 | % | 1.72 | % | 1.72 | % | 1.79 | % | 1.86 | % | ||||||||||
Net investment income |
3.74 | % | 4.45 | % | 4.34 | % | 5.64 | % | 5.14 | % | ||||||||||
Portfolio Turnover |
16 | % | 30 | % | 22 | % | 19 | % | 12 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(4) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1I). |
19 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Financial Highlights continued
Class C | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 7.460 | $ | 8.170 | $ | 7.720 | $ | 6.860 | $ | 7.310 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income(1) |
$ | 0.290 | $ | 0.342 | $ | 0.341 | $ | 0.400 | $ | 0.380 | ||||||||||
Net realized and unrealized gain (loss) |
0.889 | (0.715 | ) | 0.442 | 0.827 | (0.437 | ) | |||||||||||||
Total income (loss) from operations |
$ | 1.179 | $ | (0.373 | ) | $ | 0.783 | $ | 1.227 | $ | (0.057 | ) | ||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.299 | ) | $ | (0.337 | ) | $ | (0.333 | ) | $ | (0.367 | ) | $ | (0.393 | ) | |||||
Total distributions |
$ | (0.299 | ) | $ | (0.337 | ) | $ | (0.333 | ) | $ | (0.367 | ) | $ | (0.393 | ) | |||||
Net asset value End of year |
$ | 8.340 | $ | 7.460 | $ | 8.170 | $ | 7.720 | $ | 6.860 | ||||||||||
Total Return(2) |
16.08 | % | (4.55 | )% | 10.35 | % | 18.44 | % | (1.02 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 197,655 | $ | 129,913 | $ | 165,887 | $ | 146,788 | $ | 139,798 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses excluding interest and fees(3) |
1.58 | % | 1.62 | % | 1.61 | % | 1.68 | % | 1.73 | % | ||||||||||
Interest and fee expense(4) |
0.06 | % | 0.10 | % | 0.10 | % | 0.11 | % | 0.12 | % | ||||||||||
Total expenses(3) |
1.64 | % | 1.72 | % | 1.71 | % | 1.79 | % | 1.85 | % | ||||||||||
Net investment income |
3.65 | % | 4.47 | % | 4.30 | % | 5.60 | % | 5.14 | % | ||||||||||
Portfolio Turnover |
16 | % | 30 | % | 22 | % | 19 | % | 12 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(4) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1I). |
20 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Financial Highlights continued
Class I | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 8.070 | $ | 8.840 | $ | 8.350 | $ | 7.420 | $ | 7.910 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income(1) |
$ | 0.397 | $ | 0.453 | $ | 0.455 | $ | 0.504 | $ | 0.486 | ||||||||||
Net realized and unrealized gain (loss) |
0.963 | (0.776 | ) | 0.482 | 0.900 | (0.474 | ) | |||||||||||||
Total income (loss) from operations |
$ | 1.360 | $ | (0.323 | ) | $ | 0.937 | $ | 1.404 | $ | 0.012 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.410 | ) | $ | (0.447 | ) | $ | (0.447 | ) | $ | (0.474 | ) | $ | (0.502 | ) | |||||
Total distributions |
$ | (0.410 | ) | $ | (0.447 | ) | $ | (0.447 | ) | $ | (0.474 | ) | $ | (0.502 | ) | |||||
Net asset value End of year |
$ | 9.020 | $ | 8.070 | $ | 8.840 | $ | 8.350 | $ | 7.420 | ||||||||||
Total Return(2) |
17.21 | % | (3.61 | )% | 11.50 | % | 19.60 | % | (0.12 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 409,570 | $ | 140,885 | $ | 161,066 | $ | 124,627 | $ | 64,318 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses excluding interest and fees(3) |
0.58 | % | 0.62 | % | 0.61 | % | 0.68 | % | 0.73 | % | ||||||||||
Interest and fee expense(4) |
0.06 | % | 0.10 | % | 0.10 | % | 0.11 | % | 0.12 | % | ||||||||||
Total expenses(3) |
0.64 | % | 0.72 | % | 0.71 | % | 0.79 | % | 0.85 | % | ||||||||||
Net investment income |
4.60 | % | 5.48 | % | 5.29 | % | 6.49 | % | 6.10 | % | ||||||||||
Portfolio Turnover |
16 | % | 30 | % | 22 | % | 19 | % | 12 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(4) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1I). |
21 | See Notes to Financial Statements. |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements
1 Significant Accounting Policies
Eaton Vance High Yield Municipal Income Fund (the Fund) is a diversified series of Eaton Vance Municipals Trust II (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund seeks to provide high current income exempt from regular federal income tax. The Fund primarily invests in high yield municipal obligations with maturities of ten years or more. The Fund offers four classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B and Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I shares are sold at net asset value and are not subject to a sales charge. Class B shares automatically convert to Class A shares eight years after their purchase as described in the Funds prospectus. Beginning January 1, 2012, Class B shares are only available for purchase upon exchange from another Eaton Vance fund or through reinvestment of distributions. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Net investment income, other than class-specific expenses, is allocated daily to each class of shares based upon the ratio of the value of each classs paid shares to the total value of all paid shares. Each class of shares differs in its distribution plan and certain other class-specific expenses.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
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, interest rates, anticipated prepayments, 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.
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 the Fund in a manner that fairly reflects the securitys 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 securitys disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or 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 companys or entitys 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 The Funds 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. The 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 the Fund, as exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to shareholders.
As of January 31, 2015, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The 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 Expenses The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Expense Reduction State Street Bank and Trust Company (SSBT) serves as custodian of the Fund. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Fund maintains with SSBT. All credit balances, if any, used to reduce the Funds custodian fees are reported as a reduction of expenses in the Statement of Operations.
22 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
F 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.
G Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP 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.
H Indemnifications Under the Trusts organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trusts Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust 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, the Fund enters into agreements with service providers that may contain indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
I Floating Rate Notes Issued in Conjunction with Securities Held The Fund may invest in residual interest bonds, also referred to as inverse floating rate securities, whereby the 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 the 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 Fund accounts for the transaction described above as a secured borrowing by including the Bond in its Portfolio of Investments and the Floating Rate Notes as a liability under the caption Payable for floating rate notes issued in its 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 January 31, 2015. 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. At January 31, 2015, the amount of the Funds Floating Rate Notes outstanding and the related collateral were $83,165,000 and $137,164,677, respectively. The range of interest rates on the Floating Rate Notes outstanding at January 31, 2015 was 0.03% to 0.07%. For the year ended January 31, 2015, the Funds average Floating Rate Notes outstanding and the average interest rate including fees were $81,609,219 and 0.65%, respectively.
The Fund may enter into shortfall and forbearance agreements with the broker by which the 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 Fund had no shortfalls as of January 31, 2015.
The Fund 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.
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 Fund 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 Fund are securities exempt from registration under Rule 144A of the Securities Act of 1933.
On December 10, 2013, five U.S. federal agencies published final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Volcker Rule). The Volcker Rule prohibits banking entities from engaging in proprietary trading of certain instruments and limits such entities investments in, and relationships with, covered funds (such as SPVs), as defined in the rules. The compliance date for the Volcker Rule for certain covered funds is July 21, 2015 while for other covered funds the compliance date is July 21, 2016. The Volcker Rule may preclude banking entities and
23 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
their affiliates from (i) sponsoring residual interest bond programs (as such programs are presently structured) and (ii) continuing relationships with or services for existing residual interest bond programs. As a result, residual interest bond trusts may need to be restructured or unwound. There can be no assurances that residual interest bond trusts can be restructured, that new sponsors of residual interest bond programs will develop, or that alternative forms of leverage will be available to the Fund. The effects of the Volcker Rule may make it more difficult for the Fund to maintain current or desired levels of leverage and may cause the Fund to incur additional expenses to maintain its leverage.
J Financial Futures Contracts Upon entering into a financial futures contract, the 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.
K When-Issued Securities and Delayed Delivery Transactions The Fund 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 Fund maintains 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.
2 Distributions to Shareholders and Income Tax Information
The net investment income of the Fund is determined daily and substantially all of the net investment income so determined is declared as a dividend to shareholders of record at the time of declaration. Distributions are declared separately for each class of shares. Distributions are paid monthly. Distributions of realized capital gains (reduced by available capital loss carryforwards) are made at least annually. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are 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 January 31, 2015 and January 31, 2014 was as follows:
Year Ended January 31, | ||||||||
2015 | 2014 | |||||||
Distributions declared from: |
||||||||
Tax-exempt income |
$ | 34,978,680 | $ | 32,370,779 | ||||
Ordinary income |
$ | 1,517,659 | $ | 991,419 |
During the year ended January 31, 2015, accumulated net realized loss was increased by $759,620, accumulated undistributed net investment income was increased by $753,404 and paid-in capital was increased by $6,216 due to differences between book and tax accounting, primarily for accretion of market discount, defaulted bond interest and expenditures on defaulted bonds. These reclassifications had no effect on the net assets or net asset value per share of the Fund.
As of January 31, 2015, the components of distributable earnings (accumulated losses) and unrealized appreciation (depreciation) on a tax basis were as follows:
Undistributed tax-exempt income |
$ | 2,944,097 | ||
Capital loss carryforwards and deferred capital losses |
$ | (239,588,072 | ) | |
Net unrealized appreciation |
$ | 79,156,903 | ||
Other temporary differences |
$ | (606,207 | ) |
24 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
The differences between components of distributable earnings (accumulated losses) on a tax basis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to the timing of recognizing distributions to shareholders, wash sales, futures contracts, residual interest bonds, expenditures on defaulted bonds, defaulted bond interest and accretion of market discount.
At January 31, 2015, the Fund, for federal income tax purposes, had capital loss carryforwards of $189,417,446 and deferred capital losses of $50,170,626 which will reduce its 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 Fund of any liability for federal income or excise tax. The capital loss carryforwards will expire on January 31, 2016 ($14,863,328), January 31, 2017 ($49,195,524), January 31, 2018 ($115,791,581) and January 31, 2019 ($9,567,013) and their character is short-term. Under tax regulations, capital losses incurred in taxable years beginning after December 2010 are considered deferred capital losses and are treated as arising on the first day of the Funds next taxable year, retaining the same short-term or long-term character as when originally deferred. Deferred capital losses are required to be used prior to capital loss carryforwards, which carry an expiration date. As a result of this ordering rule, capital loss carryforwards may be more likely to expire unused. Of the deferred capital losses at January 31, 2015, $8,230,751 are short-term and $41,939,875 are long-term.
The cost and unrealized appreciation (depreciation) of investments of the Fund at January 31, 2015, as determined on a federal income tax basis, were as follows:
Aggregate cost |
$ | 993,692,922 | ||
Gross unrealized appreciation |
$ | 100,415,519 | ||
Gross unrealized depreciation |
(21,258,616 | ) | ||
Net unrealized appreciation |
$ | 79,156,903 |
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of Eaton Vance Management (EVM), as compensation for management and investment advisory services rendered to the Fund. Pursuant to the investment advisory agreement and subsequent fee reduction agreements between the Fund and BMR, the fee is based upon a percentage of average daily net assets plus a percentage of gross income (i.e., income other than gains from the sale of securities) as presented in the following table and is payable monthly.
Daily Net Assets | Annual Asset Rate |
Daily Income Rate |
||||||
Up to $500 million |
0.3150 | % | 3.1500 | % | ||||
$500 million but less than $750 million |
0.2925 | 2.9250 | ||||||
$750 million but less than $1 billion |
0.2700 | 2.9250 | ||||||
$1 billion but less than $1.5 billion |
0.2700 | 2.7000 |
On average daily net assets of $1.5 billion or more, the rates are further reduced. The fee reductions cannot be terminated without the consent of a majority of the Trustees and a majority of shareholders. For the year ended January 31, 2015, the investment adviser fee amounted to $3,858,672 or 0.47% of the Funds average daily net assets. EVM serves as the administrator of the Fund, but receives no compensation. EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the year ended January 31, 2015, EVM earned $8,362 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Funds principal underwriter, received $141,962 as its portion of the sales charge on sales of Class A shares for the year ended January 31, 2015. EVD also received distribution and service fees from Class A, Class B and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVMs or BMRs organizations receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund 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 January 31, 2015, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of the above organizations.
25 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the year ended January 31, 2015 amounted to $982,312 for Class A shares.
The Fund also has in effect distribution plans for Class B shares (Class B Plan) and Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class B and Class C Plans, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class B and Class C shares for providing ongoing distribution services and facilities to the Fund. For the year ended January 31, 2015, the Fund paid or accrued to EVD $48,419 and $1,226,963 for Class B and Class C shares, respectively.
Pursuant to the Class B and Class C Plans, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the year ended January 31, 2015 amounted to $16,140 and $408,988 for Class B and Class C shares, respectively.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authoritys NASD Conduct Rule 2830(d) and for Class B, are further limited to a 5% maximum sales charge as determined in accordance with such rule.
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B shares made within six years of purchase and on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within eighteen months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. The CDSC for Class B shares is imposed at declining rates that begin at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares are subject to a 1% CDSC if redeemed within one year of purchase. For the year ended January 31, 2015, the Fund was informed that EVD received approximately $26,000, $6,000 and $13,000 of CDSCs paid by Class A, Class B and Class C shareholders, respectively.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $533,132,037 and $144,043,554, respectively, for the year ended January 31, 2015.
7 Shares of Beneficial Interest
The Funds Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Year Ended January 31, | ||||||||
Class A | 2015 | 2014 | ||||||
Sales |
23,246,468 | 15,203,934 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
1,750,410 | 1,948,984 | ||||||
Redemptions |
(15,408,699 | ) | (23,819,370 | ) | ||||
Exchange from Class B shares |
197,277 | 402,842 | ||||||
Net increase (decrease) |
9,785,456 | (6,263,610 | ) |
26 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
Year Ended January 31, | ||||||||
Class B | 2015 | 2014 | ||||||
Sales |
25,511 | 41,104 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
23,722 | 46,285 | ||||||
Redemptions |
(195,883 | ) | (428,989 | ) | ||||
Exchange to Class A shares |
(197,899 | ) | (404,093 | ) | ||||
Net decrease |
(344,549 | ) | (745,693 | ) | ||||
Year Ended January 31, | ||||||||
Class C | 2015 | 2014 | ||||||
Sales |
10,017,316 | 4,547,666 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
571,254 | 628,704 | ||||||
Redemptions |
(4,304,906 | ) | (8,074,341 | ) | ||||
Net increase (decrease) |
6,283,664 | (2,897,971 | ) | |||||
Year Ended January 31, | ||||||||
Class I | 2015 | 2014 | ||||||
Sales |
39,195,337 | 10,147,250 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
1,153,321 | 775,609 | ||||||
Redemptions |
(12,416,197 | ) | (11,697,124 | ) | ||||
Net increase (decrease) |
27,932,461 | (774,265 | ) |
8 Line of Credit
The Fund participates with other portfolios and funds managed by EVM and its affiliates in a $750 million unsecured line of credit agreement with a group of banks. Borrowings are made by the Fund solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Fund based on its borrowings at an amount above either the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an annual rate of 0.08% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. Because the line of credit is not available exclusively to the Fund, it may be unable to borrow some or all of its requested amounts at any particular time. The Fund did not have any significant borrowings or allocated fees during the year ended January 31, 2015.
9 Financial Instruments
The Fund may trade in financial instruments with off-balance sheet risk in the normal course of its 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 the 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.
27 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
A summary of obligations under these financial instruments at January 31, 2015 is as follows:
Futures Contracts | ||||||||||||||||
Expiration Month/Year |
Contracts | Position | Aggregate Cost | Value | Net Unrealized Depreciation |
|||||||||||
3/15 | 175 U.S. 10-Year Treasury Note |
Short | $ | (22,066,086 | ) | $ | (22,903,125 | ) | $ | (837,039 | ) | |||||
3/15 | 168 U.S. Long Treasury Bond |
Short | (23,624,845 | ) | (25,415,249 | ) | (1,790,404 | ) | ||||||||
$ | (2,627,443 | ) |
At January 31, 2015, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
The Fund is subject to interest rate risk in the normal course of pursuing its investment objective. Because the Fund holds fixed-rate bonds, the value of these bonds may decrease if interest rates rise. The Fund purchases and sells U.S. Treasury futures contracts to hedge against changes in interest rates.
The fair value 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 January 31, 2015 was as follows:
Fair Value | ||||||||
Derivative | Asset Derivative | Liability Derivative | ||||||
Futures Contracts |
$ | | $ | (2,627,443 | )(1) |
(1) | Amount represents cumulative unrealized depreciation on futures contracts in the Futures Contracts table above. Only the current days variation margin on open futures contracts is reported within the Statement 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 January 31, 2015 was as follows:
Derivative |
Realized Gain (Loss) in Income |
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income |
||||||
Futures Contracts |
$ | (3,416,811 | )(1) | $ | (1,969,308 | )(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 amount of futures contracts outstanding during the year ended January 31, 2015, which is indicative of the volume of this derivative type, was approximately $44,778,000.
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.
| Level 1 quoted prices in active markets for identical investments |
| Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| Level 3 significant unobservable inputs (including a funds own assumptions in determining the fair value of investments) |
28 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Notes to Financial Statements continued
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 January 31, 2015, the hierarchy of inputs used in valuing the Funds investments and open derivative instruments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Tax-Exempt Municipal Securities |
$ | | $ | 1,126,901,792 | $ | | $ | 1,126,901,792 | ||||||||
Taxable Municipal Securities |
| 22,998,700 | | 22,998,700 | ||||||||||||
Corporate Bonds & Notes |
| 6,114,333 | | 6,114,333 | ||||||||||||
Total Investments |
$ | | $ | 1,156,014,825 | $ | | $ | 1,156,014,825 | ||||||||
Liability Description |
||||||||||||||||
Futures Contracts |
$ | (2,627,443 | ) | $ | | $ | | $ | (2,627,443 | ) | ||||||
Total |
$ | (2,627,443 | ) | $ | | $ | | $ | (2,627,443 | ) |
The Fund held no investments or other financial instruments as of January 31, 2014 whose fair value was determined using Level 3 inputs. At January 31, 2015, there were no investments transferred between Level 1 and Level 2 during the year then ended.
29 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Report of Independent Registered Public Accounting Firm
To the Trustees of Eaton Vance Municipals Trust II and Shareholders of Eaton Vance High Yield Municipal Income Fund:
We have audited the accompanying statement of assets and liabilities of Eaton Vance High Yield Municipal Income Fund (the Fund) (one of the funds constituting Eaton Vance Municipals Trust II), including the portfolio of investments, as of January 31, 2015, and the related statement of operations 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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its 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 January 31, 2015, 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, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Eaton Vance High Yield Municipal Income Fund as of January 31, 2015, the results of its operations for the year then ended, the changes in its 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
March 19, 2015
30 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Federal Tax Information (Unaudited)
The Form 1099-DIV you receive in February 2016 will show the tax status of all distributions paid to your account in calendar year 2015. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding exempt-interest dividends.
Exempt-Interest Dividends. For the fiscal year ended January 31, 2015, the Fund designates 95.84% of distributions from net investment income as an exempt-interest dividend.
31 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Management and Organization
Fund Management. The Trustees of Eaton Vance Municipals Trust II (the Trust) are responsible for the overall management and supervision of the Trusts affairs. The Trustees and officers of the Trust 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. Trustees and officers of the Trust hold indefinite terms of office. The Noninterested Trustees consist of those Trustees who are not interested persons of the Trust, 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 the Funds principal underwriter and 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 178 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 and officer serves until his or her successor is elected.
Name and Year of Birth | Position(s) with the Trust |
Trustee Since(1) |
Principal Occupation(s) and Directorships During Past Five Years and Other Relevant Experience | |||
Interested Trustee | ||||||
Thomas E. Faust Jr. 1958 |
Trustee | 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 178 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 Trust. Directorships in the Last Five Years.(2) Director of EVC and Hexavest Inc. | |||
Noninterested Trustees | ||||||
Scott E. Eston 1956 |
Trustee | 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.(2) None. | |||
Cynthia E. Frost(3) 1961 |
Trustee | 2014 | Private investor. Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012); Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000); Managing Director, Cambridge Associates (1989-1995); Consultant, Bain and Company (1987-1989); Senior Equity Analyst, BA Investment Management Company (1983-1985). Directorships in the Last Five Years. None. | |||
George J. Gorman(3) 1952 |
Trustee | 2014 | Principal at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (public accounting firm) (1974-2009). Directorships in the Last Five Years. Formerly, Trustee of the Bank of America Money Market Funds Series Trust (2011-2014) and of the Ashmore Funds (2010-2014). | |||
Valerie A. Mosley 1960 |
Trustee | 2014 | Chairwoman and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Former Partner and Senior Vice President, Portfolio Manager and Investment Strategist at Wellington Management Company, LLP (investment management firm) (1992-2012). Former Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990). Directorships in the Last Five Years.(2) Director of Dynex Capital, Inc. (mortgage REIT) (since 2013). | |||
William H. Park 1947 |
Trustee | 2003 | Private investor. Formerly, Consultant (2012-2014). 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.(2) None. |
32 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Management and Organization continued
Name and Year of Birth | Position(s) with the Trust |
Trustee Since(1) |
Principal Occupation(s) and Directorships During Past Five Years and Other Relevant Experience | |||
Noninterested Trustees (continued) | ||||||
Ronald A. Pearlman 1940 |
Trustee | 2003 | Lawyer and consultant. Formerly, Professor of Law, Georgetown University Law Center (1999-2014). Formerly, Partner, Covington & Burling LLP (law firm) (1991-2000). Formerly, Chief of Staff, Joint Committee on Taxation, U.S. Congress (1988-1990). Formerly, Deputy Assistant Secretary (Tax Policy) and Assistant Secretary (Tax Policy), U.S. Department of the Treasury (1983-1985). Directorships in the Last Five Years.(2) None. | |||
Helen Frame Peters 1948 |
Trustee | 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.(2) Formerly, Director of BJs 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). | |||
Harriett Tee Taggart 1948 |
Trustee | 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.(2) 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 1943 |
Chairman of the Board and Trustee |
2007 (Chairman) 2005 (Trustee) |
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.(2) None. | |||
Principal Officers who are not Trustees | ||||||
Name and Year of Birth | Position(s) with the Trust |
Officer Since(4) |
Principal Occupation(s) During Past Five Years | |||
Payson F. Swaffield 1956 |
President | 2003 | Vice President and Chief Income Investment Officer of EVM and BMR. | |||
Maureen A. Gemma 1960 |
Vice President, Secretary and Chief Legal Officer | 2005 | Vice President of EVM and BMR. | |||
James F. Kirchner 1967 |
Treasurer | 2007 | Vice President of EVM and BMR. | |||
Paul M. ONeil 1953 |
Chief Compliance Officer | 2004 | Vice President of EVM and BMR. |
(1) | Year first appointed to serve as Trustee for a fund in the Eaton Vance family of funds. Each Trustee has served continuously since appointment unless indicated otherwise. |
(2) | During their respective tenures, the Trustees (except for Ms. Frost and Mr. Gorman) also served as Board members of one or more of the following funds (which operated in the years noted): eUnitsTM 2 Year U.S. Market Participation Trust: Upside to Cap / Buffered Downside (launched in 2012 and terminated in 2014); eUnitsTM 2 Year U.S. Market Participation Trust II: Upside to Cap / Buffered Downside (launched in 2012 and terminated in 2014); 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). However, Ms. Mosley did not serve as a Board member of eUnitsTM 2 Year U.S. Market Participation Trust: Upside to Cap / Buffered Downside (launched in 2012 and terminated in 2014). |
(3) | Ms. Frost and Mr. Gorman began serving as Trustees effective May 29, 2014. |
33 |
Eaton Vance
High Yield Municipal Income Fund
January 31, 2015
Management and Organization continued
(4) | Year first elected to serve as officer of a fund in the Eaton Vance family of funds when the officer has served continuously. Otherwise, year of most recent election as an officer of a fund in the Eaton Vance family of funds. Titles may have changed since initial election. |
The SAI for the Fund includes additional information about the Trustees and officers of the Fund and can be obtained without charge on Eaton Vances website at www.eatonvance.com or by calling 1-800-262-1122.
34 |
Eaton Vance Funds
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:
| 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. |
| 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 customers account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
| Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
| 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 Managements 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 customers account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisors privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vances 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 SECs website at www.sec.gov. Form N-Q may also be reviewed and copied at the SECs 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 SECs website at www.sec.gov.
35 |
This Page Intentionally Left Blank
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
416 1.31.15 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
Annual Report
January 31, 2015
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. Accordingly, neither the Funds nor the adviser with respect to the operation of the Funds is subject to CFTC regulation. Because of its management of other strategies, each Funds adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
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.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Annual Report January 31, 2015
Eaton Vance
Tax-Advantaged Bond Strategies Funds
Table of Contents
Managements Discussion of Fund Performance |
2 | |||
Performance and Fund Profile |
||||
TABS Short-Term Municipal Bond Fund |
4 | |||
TABS Intermediate-Term Municipal Bond Fund |
6 | |||
Tax-Advantaged Bond Strategies Long Term Fund |
8 | |||
Endnotes and Additional Disclosures |
10 | |||
Fund Expenses |
11 | |||
Financial Statements |
13 | |||
Report of Independent Registered Public Accounting Firm |
46 | |||
Federal Tax Information |
47 | |||
Management and Organization |
48 | |||
Important Notices |
51 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Managements Discussion of Fund Performance1
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Managements Discussion of Fund Performance1continued
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month end, please refer to eatonvance.com.
3 |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Performance2,3
Portfolio Managers James H. Evans, CFA, Brian C. Barney, CFA and Devin J. Cooch, CFA
% Average Annual Total Returns | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Ten Years | |||||||||||||||
Class A at NAV |
03/27/2009 | 12/31/1998 | 2.80 | % | 2.52 | % | 3.37 | % | ||||||||||||
Class A with 2.25% Maximum Sales Charge |
| | 0.52 | 2.04 | 3.13 | |||||||||||||||
Class C at NAV |
03/27/2009 | 12/31/1998 | 2.04 | 1.76 | 2.93 | |||||||||||||||
Class C with 1% Maximum Sales Charge |
| | 1.04 | 1.76 | 2.93 | |||||||||||||||
Class I at NAV |
03/27/2009 | 12/31/1998 | 3.06 | 2.79 | 3.53 | |||||||||||||||
Barclays 5 Year Municipal Bond Index |
| | 3.66 | % | 3.63 | % | 4.13 | % | ||||||||||||
Barclays Municipal Managed Money 17 Year Bond Index |
| | 2.80 | 2.91 | | |||||||||||||||
% After-Tax Returns with Maximum Sales Charge | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Ten Years | |||||||||||||||
Class A After Taxes on Distributions |
03/27/2009 | 12/31/1998 | 0.49 | % | 1.86 | % | | |||||||||||||
Class A After Taxes on Distributions and Sale of Fund Shares |
| | 0.80 | 1.75 | | |||||||||||||||
Class C After Taxes on Distributions |
03/27/2009 | 12/31/1998 | 1.00 | 1.58 | | |||||||||||||||
Class C After Taxes on Distributions and Sale of Fund Shares |
| | 0.78 | 1.38 | | |||||||||||||||
Class I After Taxes on Distributions |
03/27/2009 | 12/31/1998 | 3.02 | 2.60 | | |||||||||||||||
Class I After Taxes on Distributions and Sale of Fund Shares |
| | 2.36 | 2.39 | | |||||||||||||||
% Total Annual Operating Expense Ratios4 | Class A | Class C | Class I | |||||||||||||||||
0.90 | % | 1.65 | % | 0.65 | % | |||||||||||||||
% Distribution Rates/Yields5 | Class A | Class C | Class I | |||||||||||||||||
Distribution Rate at NAV |
1.07 | % | 0.32 | % | 1.31 | % | ||||||||||||||
SEC 30-day Yield |
0.06 | 0.67 | 0.31 |
Growth of $10,000
This graph shows the change in value of a hypothetical investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge | ||||||||||||
Class C |
$ | 10,000 | 01/31/2005 | $ | 13,348 | N.A. | ||||||||||
Class I |
$ | 250,000 | 01/31/2005 | $ | 353,686 | N.A. |
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
4 |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Fund Profile
See Endnotes and Additional Disclosures in this report.
5 |
Eaton Vance
TABS Intermediate-Term Municipal Bond Fund
January 31, 2015
Performance2,3
Portfolio Managers James H. Evans, CFA, Brian C. Barney, CFA, and Christopher J. Harshman, CFA
% Average Annual Total Returns | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Since Inception |
|||||||||||||||
Class A at NAV |
02/01/2010 | 02/01/2010 | 7.91 | % | 6.11 | % | 6.10 | % | ||||||||||||
Class A with 2.25% Maximum Sales Charge |
| | 5.46 | 5.62 | 5.62 | |||||||||||||||
Class C at NAV |
02/01/2010 | 02/01/2010 | 7.02 | 5.32 | 5.31 | |||||||||||||||
Class C with 1% Maximum Sales Charge |
| | 6.02 | 5.32 | 5.31 | |||||||||||||||
Class I at NAV |
02/01/2010 | 02/01/2010 | 8.17 | 6.38 | 6.38 | |||||||||||||||
Barclays Municipal Managed Money Intermediate |
| | 7.07 | % | 4.79 | % | 4.79 | % | ||||||||||||
Barclays 7 Year Municipal Bond Index |
| | 6.33 | 4.97 | 4.97 | |||||||||||||||
% After-Tax Returns with Maximum Sales Charge | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Since Inception |
|||||||||||||||
Class A After Taxes on Distributions |
02/01/2010 | 02/01/2010 | 5.46 | % | 5.45 | % | 5.44 | % | ||||||||||||
Class A After Taxes on Distributions and Sale of Fund Shares |
| | 3.79 | 4.62 | 4.61 | |||||||||||||||
Class C After Taxes on Distributions |
02/01/2010 | 02/01/2010 | 6.02 | 5.14 | 5.13 | |||||||||||||||
Class C After Taxes on Distributions and Sale of Fund Shares |
| | 3.79 | 4.21 | 4.20 | |||||||||||||||
Class I After Taxes on Distributions |
02/01/2010 | 02/01/2010 | 8.18 | 6.21 | 6.20 | |||||||||||||||
Class I After Taxes on Distributions and Sale of Fund Shares |
| | 5.46 | 5.29 | 5.28 | |||||||||||||||
% Total Annual Operating Expense Ratios4 | Class A | Class C | Class I | |||||||||||||||||
Gross |
1.00 | % | 1.75 | % | 0.75 | % | ||||||||||||||
Net |
0.90 | 1.65 | 0.65 | |||||||||||||||||
% Distribution Rates/Yields5 | Class A | Class C | Class I | |||||||||||||||||
Distribution Rate at NAV |
1.50 | % | 0.75 | % | 1.75 | % | ||||||||||||||
SEC 30-day Yield |
0.77 | 0.05 | 1.03 |
Growth of $10,000
This graph shows the change in value of a hypothetical investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge | ||||||||||||
Class C |
$ | 10,000 | 02/01/2010 | $ | 12,957 | N.A. | ||||||||||
Class I |
$ | 250,000 | 02/01/2010 | $ | 340,721 | N.A. |
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
6 |
Eaton Vance
TABS Intermediate-Term Municipal Bond Fund
January 31, 2015
Fund Profile
See Endnotes and Additional Disclosures in this report.
7 |
Eaton Vance
Tax-Advantaged Bond Strategies Long Term Fund
January 31, 2015
Performance2,3
Portfolio Managers James H. Evans, CFA, Brian C. Barney, CFA and Christopher J. Harshman, CFA
% Average Annual Total Returns | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Since Inception |
|||||||||||||||
Class A at NAV |
02/01/2010 | 02/01/2010 | 14.75 | % | 8.83 | % | 8.82 | % | ||||||||||||
Class A with 4.75% Maximum Sales Charge |
| | 9.29 | 7.77 | 7.76 | |||||||||||||||
Class C at NAV |
02/01/2010 | 02/01/2010 | 13.92 | 8.01 | 8.00 | |||||||||||||||
Class C with 1% Maximum Sales Charge |
| | 12.92 | 8.01 | 8.00 | |||||||||||||||
Class I at NAV |
02/01/2010 | 02/01/2010 | 15.05 | 9.08 | 9.07 | |||||||||||||||
Barclays Municipal Managed Money Long (10+) Year Bond Index |
| | 13.54 | % | 6.90 | % | 6.90 | % | ||||||||||||
Barclays 15 Year Municipal Bond Index |
| | 11.15 | 6.49 | 6.48 | |||||||||||||||
% After-Tax Returns with Maximum Sales Charge | Class Inception Date |
Performance Inception Date |
One Year | Five Years | Since Inception |
|||||||||||||||
Class A After Taxes on Distributions |
02/01/2010 | 02/01/2010 | 9.29 | % | 6.89 | % | 6.88 | % | ||||||||||||
Class A After Taxes on Distributions and Sale of Fund Shares |
| | 6.39 | 6.24 | 6.23 | |||||||||||||||
Class C After Taxes on Distributions |
02/01/2010 | 02/01/2010 | 12.92 | 7.12 | 7.11 | |||||||||||||||
Class C After Taxes on Distributions and Sale of Fund Shares |
| | 8.16 | 6.29 | 6.28 | |||||||||||||||
Class I After Taxes on Distributions |
02/01/2010 | 02/01/2010 | 15.06 | 8.18 | 8.17 | |||||||||||||||
Class I After Taxes on Distributions and Sale of Fund Shares |
| | 9.84 | 7.35 | 7.35 | |||||||||||||||
% Total Annual Operating Expense Ratios4 | Class A | Class C | Class I | |||||||||||||||||
Gross |
1.45 | % | 2.20 | % | 1.20 | % | ||||||||||||||
Net |
0.90 | 1.65 | 0.65 | |||||||||||||||||
% Distribution Rates/Yields5 | Class A | Class C | Class I | |||||||||||||||||
Distribution Rate at NAV |
2.32 | % | 1.54 | % | 2.58 | % | ||||||||||||||
SEC 30-day Yield |
1.52 | 0.85 | 1.86 |
Growth of $10,000
This graph shows the change in value of a hypothetical investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge | ||||||||||||
Class C |
$ | 10,000 | 02/01/2010 | $ | 14,705 | N.A. | ||||||||||
Class I |
$ | 250,000 | 02/01/2010 | $ | 386,189 | N.A. |
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 offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, the Funds current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
8 |
Eaton Vance
Tax-Advantaged Bond Strategies Long Term Fund
January 31, 2015
Fund Profile
See Endnotes and Additional Disclosures in this report.
9 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Endnotes and Additional Disclosures
10 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2014 January 31, 2015).
Actual Expenses: The first section of each table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of each table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in each table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Eaton Vance TABS Short-Term Municipal Bond Fund
Beginning Account Value (8/1/14) |
Ending Account Value (1/31/15) |
Expenses Paid During Period* (8/1/14 1/31/15) |
Annualized Expense Ratio |
|||||||||||||
Actual |
||||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,016.70 | $ | 4.57 | 0.90 | % | ||||||||
Class C |
$ | 1,000.00 | $ | 1,012.90 | $ | 8.37 | 1.65 | % | ||||||||
Class I |
$ | 1,000.00 | $ | 1,017.90 | $ | 3.31 | 0.65 | % | ||||||||
Hypothetical |
||||||||||||||||
(5% return per year before expenses) |
||||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,020.70 | $ | 4.58 | 0.90 | % | ||||||||
Class C |
$ | 1,000.00 | $ | 1,016.90 | $ | 8.39 | 1.65 | % | ||||||||
Class I |
$ | 1,000.00 | $ | 1,021.90 | $ | 3.31 | 0.65 | % |
* | Expenses are equal to the Funds annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on July 31, 2014. |
11 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Fund Expenses continued
Eaton Vance TABS Intermediate-Term Municipal Bond Fund
Beginning Account Value (8/1/14) |
Ending Account Value (1/31/15) |
Expenses Paid During Period* (8/1/14 1/31/15) |
Annualized Expense Ratio |
|||||||||||||
Actual |
||||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,041.70 | $ | 4.63 | ** | 0.90 | % | |||||||
Class C |
$ | 1,000.00 | $ | 1,036.90 | $ | 8.47 | ** | 1.65 | % | |||||||
Class I |
$ | 1,000.00 | $ | 1,043.00 | $ | 3.35 | ** | 0.65 | % | |||||||
Hypothetical |
||||||||||||||||
(5% return per year before expenses) |
||||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,020.70 | $ | 4.58 | ** | 0.90 | % | |||||||
Class C |
$ | 1,000.00 | $ | 1,016.90 | $ | 8.39 | ** | 1.65 | % | |||||||
Class I |
$ | 1,000.00 | $ | 1,021.90 | $ | 3.31 | ** | 0.65 | % |
* | Expenses are equal to the Funds annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on July 31, 2014. |
** | Absent an allocation of expenses to an affiliate, expenses would be higher. |
Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund
Beginning Account Value (8/1/14) |
Ending Account Value (1/31/15) |
Expenses Paid During Period* (8/1/14 1/31/15) |
Annualized Expense Ratio |
|||||||||||||
Actual |
||||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,078.40 | $ | 4.71 | ** | 0.90 | % | |||||||
Class C |
$ | 1,000.00 | $ | 1,074.50 | $ | 8.63 | ** | 1.65 | % | |||||||
Class I |
$ | 1,000.00 | $ | 1,080.30 | $ | 3.41 | ** | 0.65 | % | |||||||
Hypothetical |
||||||||||||||||
(5% return per year before expenses) |
||||||||||||||||
Class A |
$ | 1,000.00 | $ | 1,020.70 | $ | 4.58 | ** | 0.90 | % | |||||||
Class C |
$ | 1,000.00 | $ | 1,016.90 | $ | 8.39 | ** | 1.65 | % | |||||||
Class I |
$ | 1,000.00 | $ | 1,021.90 | $ | 3.31 | ** | 0.65 | % |
* | Expenses are equal to the Funds annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on July 31, 2014. |
** | Absent an allocation of expenses to an affiliate, expenses would be higher. |
12 |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments
13 | See Notes to Financial Statements. |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
14 | See Notes to Financial Statements. |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
15 | See Notes to Financial Statements. |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
16 | See Notes to Financial Statements. |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
17 | See Notes to Financial Statements. |
Eaton Vance
TABS Short-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
18 | See Notes to Financial Statements. |
Eaton Vance
TABS Intermediate-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments
19 | See Notes to Financial Statements. |
Eaton Vance
TABS Intermediate-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
20 | See Notes to Financial Statements. |
Eaton Vance
TABS Intermediate-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
21 | See Notes to Financial Statements. |
Eaton Vance
TABS Intermediate-Term Municipal Bond Fund
January 31, 2015
Portfolio of Investments continued
22 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Long Term Fund
January 31, 2015
Portfolio of Investments
23 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Long Term Fund
January 31, 2015
Portfolio of Investments continued
24 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Statements of Assets and Liabilities
January 31, 2015 | ||||||||||||
Assets | Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
|||||||||
Investments |
||||||||||||
Identified cost |
$ | 561,461,667 | $ | 322,905,743 | $ | 20,818,918 | ||||||
Unrealized appreciation |
24,371,898 | 20,435,392 | 2,110,694 | |||||||||
Investments, at value |
$ | 585,833,565 | $ | 343,341,135 | $ | 22,929,612 | ||||||
Cash |
$ | 5,301,273 | $ | 33,619,290 | $ | 2,736,363 | ||||||
Interest receivable |
6,007,442 | 3,341,694 | 178,259 | |||||||||
Receivable for investments sold |
3,919,595 | 232,668 | | |||||||||
Receivable for Fund shares sold |
2,211,669 | 1,396,758 | 352,414 | |||||||||
Receivable from affiliate |
| 60,734 | 16,138 | |||||||||
Total assets |
$ | 603,273,544 | $ | 381,992,279 | $ | 26,212,786 | ||||||
Liabilities | ||||||||||||
Payable for when-issued securities |
$ | 6,763,018 | $ | 11,748,732 | $ | 491,280 | ||||||
Payable for Fund shares redeemed |
3,578,092 | 421,307 | 12,585 | |||||||||
Distributions payable |
134,580 | 327,296 | 13,849 | |||||||||
Payable to affiliates: |
||||||||||||
Investment adviser and administration fee |
277,807 | 182,565 | 12,340 | |||||||||
Distribution and service fees |
143,318 | 43,714 | 3,424 | |||||||||
Accrued expenses |
125,363 | 92,956 | 36,977 | |||||||||
Total liabilities |
$ | 11,022,178 | $ | 12,816,570 | $ | 570,455 | ||||||
Net Assets |
$ | 592,251,366 | $ | 369,175,709 | $ | 25,642,331 | ||||||
Sources of Net Assets | ||||||||||||
Paid-in capital |
$ | 567,588,929 | $ | 351,339,289 | $ | 23,771,084 | ||||||
Accumulated net realized gain (loss) |
357,845 | (2,584,513 | ) | (238,854 | ) | |||||||
Accumulated distributions in excess of net investment income |
(67,306 | ) | (14,459 | ) | (593 | ) | ||||||
Net unrealized appreciation |
24,371,898 | 20,435,392 | 2,110,694 | |||||||||
Net Assets |
$ | 592,251,366 | $ | 369,175,709 | $ | 25,642,331 | ||||||
Class A Shares | ||||||||||||
Net Assets |
$ | 243,949,565 | $ | 58,615,973 | $ | 7,908,588 | ||||||
Shares Outstanding |
22,706,885 | 4,758,474 | 654,945 | |||||||||
Net Asset Value and Redemption Price Per Share |
||||||||||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 10.74 | $ | 12.32 | $ | 12.08 | ||||||
Maximum Offering Price Per Share |
||||||||||||
(100 ÷ 97.75, 97.75 and 95.25, respectively, of net asset value per share) |
$ | 10.99 | $ | 12.60 | $ | 12.68 | ||||||
Class C Shares | ||||||||||||
Net Assets |
$ | 106,273,027 | $ | 37,435,004 | $ | 2,389,537 | ||||||
Shares Outstanding |
9,913,908 | 3,040,001 | 197,989 | |||||||||
Net Asset Value and Offering Price Per Share* |
||||||||||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 10.72 | $ | 12.31 | $ | 12.07 | ||||||
Class I Shares | ||||||||||||
Net Assets |
$ | 242,028,774 | $ | 273,124,732 | $ | 15,344,206 | ||||||
Shares Outstanding |
22,521,803 | 22,152,965 | 1,271,201 | |||||||||
Net Asset Value, Offering Price and Redemption Price Per Share |
||||||||||||
(net assets ÷ shares of beneficial interest outstanding) |
$ | 10.75 | $ | 12.33 | $ | 12.07 |
On sales of $50,000 or more for Long Term Fund and $100,000 or more for Short-Term Municipal Bond Fund and Intermediate-Term Municipal Bond Fund, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
25 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Statements of Operations
Year Ended January 31, 2015 | ||||||||||||
Investment Income | Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
|||||||||
Interest |
$ | 12,875,557 | $ | 8,050,759 | $ | 723,886 | ||||||
Total investment income |
$ | 12,875,557 | $ | 8,050,759 | $ | 723,886 | ||||||
Expenses | ||||||||||||
Investment adviser and administration fee |
$ | 3,494,661 | $ | 1,921,701 | $ | 123,776 | ||||||
Distribution and service fees |
||||||||||||
Class A |
718,878 | 159,100 | 14,071 | |||||||||
Class C |
1,215,788 | 344,875 | 22,504 | |||||||||
Trustees fees and expenses |
29,127 | 15,938 | 1,507 | |||||||||
Custodian fee |
152,207 | 85,098 | 21,511 | |||||||||
Transfer and dividend disbursing agent fees |
212,137 | 170,567 | 7,554 | |||||||||
Legal and accounting services |
52,957 | 48,479 | 29,235 | |||||||||
Printing and postage |
47,447 | 30,460 | 9,309 | |||||||||
Registration fees |
70,261 | 92,658 | 43,647 | |||||||||
Miscellaneous |
70,707 | 41,789 | 16,835 | |||||||||
Total expenses |
$ | 6,064,170 | $ | 2,910,665 | $ | 289,949 | ||||||
Deduct |
||||||||||||
Reduction of custodian fee |
$ | 5,682 | $ | 6,272 | $ | 351 | ||||||
Allocation of expenses to affiliate |
| 266,336 | 115,329 | |||||||||
Total expense reductions |
$ | 5,682 | $ | 272,608 | $ | 115,680 | ||||||
Net expenses |
$ | 6,058,488 | $ | 2,638,057 | $ | 174,269 | ||||||
Net investment income |
$ | 6,817,069 | $ | 5,412,702 | $ | 549,617 | ||||||
Realized and Unrealized Gain (Loss) | ||||||||||||
Net realized gain (loss) |
||||||||||||
Investment transactions |
$ | 3,749,518 | $ | 5,884,325 | $ | 836,837 | ||||||
Net realized gain |
$ | 3,749,518 | $ | 5,884,325 | $ | 836,837 | ||||||
Change in unrealized appreciation (depreciation) |
||||||||||||
Investments |
$ | 6,563,573 | $ | 13,550,306 | $ | 1,471,461 | ||||||
Net change in unrealized appreciation (depreciation) |
$ | 6,563,573 | $ | 13,550,306 | $ | 1,471,461 | ||||||
Net realized and unrealized gain |
$ | 10,313,091 | $ | 19,434,631 | $ | 2,308,298 | ||||||
Net increase in net assets from operations |
$ | 17,130,160 | $ | 24,847,333 | $ | 2,857,915 |
26 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Statements of Changes in Net Assets
Year Ended January 31, 2015 | ||||||||||||
Increase (Decrease) in Net Assets | Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
|||||||||
From operations |
||||||||||||
Net investment income |
$ | 6,817,069 | $ | 5,412,702 | $ | 549,617 | ||||||
Net realized gain from investment transactions |
3,749,518 | 5,884,325 | 836,837 | |||||||||
Net change in unrealized appreciation (depreciation) from investments |
6,563,573 | 13,550,306 | 1,471,461 | |||||||||
Net increase in net assets from operations |
$ | 17,130,160 | $ | 24,847,333 | $ | 2,857,915 | ||||||
Distributions to shareholders |
||||||||||||
From net investment income |
||||||||||||
Class A |
$ | (3,216,135 | ) | $ | (1,017,096 | ) | $ | (145,068 | ) | |||
Class C |
(450,854 | ) | (292,442 | ) | (41,375 | ) | ||||||
Class I |
(3,136,961 | ) | (4,097,324 | ) | (360,203 | ) | ||||||
From net realized gain |
||||||||||||
Class A |
(360,918 | ) | | | ||||||||
Class C |
(159,846 | ) | | | ||||||||
Class I |
(349,449 | ) | | | ||||||||
Total distributions to shareholders |
$ | (7,674,163 | ) | $ | (5,406,862 | ) | $ | (546,646 | ) | |||
Transactions in shares of beneficial interest |
||||||||||||
Proceeds from sale of shares |
||||||||||||
Class A |
$ | 36,242,226 | $ | 22,404,741 | $ | 4,862,117 | ||||||
Class C |
6,647,343 | 9,824,971 | 950,779 | |||||||||
Class I |
99,730,371 | 136,696,572 | 6,298,684 | |||||||||
Net asset value of shares issued to shareholders in payment of distributions declared |
||||||||||||
Class A |
3,054,342 | 715,727 | 144,064 | |||||||||
Class C |
512,032 | 134,793 | 40,677 | |||||||||
Class I |
2,140,497 | 964,737 | 191,016 | |||||||||
Cost of shares redeemed |
||||||||||||
Class A |
(131,180,326 | ) | (37,147,802 | ) | (3,098,044 | ) | ||||||
Class C |
(44,765,747 | ) | (9,055,659 | ) | (984,832 | ) | ||||||
Class I |
(90,672,804 | ) | (61,757,327 | ) | (2,257,765 | ) | ||||||
Net increase (decrease) in net assets from Fund share transactions |
$ | (118,292,066 | ) | $ | 62,780,753 | $ | 6,146,696 | |||||
Net increase (decrease) in net assets |
$ | (108,836,069 | ) | $ | 82,221,224 | $ | 8,457,965 | |||||
Net Assets | ||||||||||||
At beginning of year |
$ | 701,087,435 | $ | 286,954,485 | $ | 17,184,366 | ||||||
At end of year |
$ | 592,251,366 | $ | 369,175,709 | $ | 25,642,331 | ||||||
Accumulated distributions in excess of net investment income included in net assets |
||||||||||||
At end of year |
$ | (67,306 | ) | $ | (14,459 | ) | $ | (593 | ) |
27 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Statements of Changes in Net Assets continued
Year Ended January 31, 2014 | ||||||||||||
Increase (Decrease) in Net Assets | Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
|||||||||
From operations |
||||||||||||
Net investment income |
$ | 5,685,220 | $ | 4,302,401 | $ | 438,626 | ||||||
Net realized loss from investment transactions |
(2,391,196 | ) | (8,484,478 | ) | (1,080,615 | ) | ||||||
Net change in unrealized appreciation (depreciation) from investments |
(6,138,712 | ) | (1,135,021 | ) | (70,965 | ) | ||||||
Net decrease in net assets from operations |
$ | (2,844,688 | ) | $ | (5,317,098 | ) | $ | (712,954 | ) | |||
Distributions to shareholders |
||||||||||||
From net investment income |
||||||||||||
Class A |
$ | (2,942,479 | ) | $ | (1,075,704 | ) | $ | (145,474 | ) | |||
Class C |
(7,494 | ) | (187,427 | ) | (39,972 | ) | ||||||
Class I |
(2,723,791 | ) | (3,033,094 | ) | (251,857 | ) | ||||||
From net realized gain |
||||||||||||
Class A |
(580,739 | ) | (355,455 | ) | (202,602 | ) | ||||||
Class C |
(260,956 | ) | (173,086 | ) | (98,225 | ) | ||||||
Class I |
(400,944 | ) | (792,514 | ) | (359,727 | ) | ||||||
Total distributions to shareholders |
$ | (6,916,403 | ) | $ | (5,617,280 | ) | $ | (1,097,857 | ) | |||
Transactions in shares of beneficial interest |
||||||||||||
Proceeds from sale of shares |
||||||||||||
Class A |
$ | 85,829,422 | $ | 35,338,281 | $ | 4,466,370 | ||||||
Class C |
23,572,306 | 8,096,053 | 589,848 | |||||||||
Class I |
104,073,452 | 111,827,074 | 4,415,447 | |||||||||
Net asset value of shares issued to shareholders in payment of distributions declared |
||||||||||||
Class A |
3,076,804 | 1,098,276 | 345,999 | |||||||||
Class C |
228,670 | 181,812 | 135,077 | |||||||||
Class I |
1,839,490 | 872,821 | 289,878 | |||||||||
Cost of shares redeemed |
||||||||||||
Class A |
(268,564,898 | ) | (79,775,352 | ) | (13,070,023 | ) | ||||||
Class C |
(103,510,175 | ) | (30,128,282 | ) | (3,061,231 | ) | ||||||
Class I |
(211,980,113 | ) | (176,084,445 | ) | (4,567,135 | ) | ||||||
Net decrease in net assets from Fund share transactions |
$ | (365,435,042 | ) | $ | (128,573,762 | ) | $ | (10,455,770 | ) | |||
Net decrease in net assets |
$ | (375,196,133 | ) | $ | (139,508,140 | ) | $ | (12,266,581 | ) | |||
Net Assets | ||||||||||||
At beginning of year |
$ | 1,076,283,568 | $ | 426,462,625 | $ | 29,450,947 | ||||||
At end of year |
$ | 701,087,435 | $ | 286,954,485 | $ | 17,184,366 | ||||||
Accumulated distributions in excess of net investment income included in net assets |
||||||||||||
At end of year |
$ | (67,307 | ) | $ | (10,959 | ) | $ | (43 | ) |
28 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights
Short-Term Municipal Bond Fund Class A | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 10.580 | $ | 10.660 | $ | 10.810 | $ | 10.230 | $ | 10.260 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.122 | $ | 0.081 | $ | 0.060 | $ | 0.078 | $ | 0.090 | ||||||||||
Net realized and unrealized gain (loss) |
0.173 | (0.069 | ) | 0.069 | 0.626 | 0.084 | (1) | |||||||||||||
Total income from operations |
$ | 0.295 | $ | 0.012 | $ | 0.129 | $ | 0.704 | $ | 0.174 | ||||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.119 | ) | $ | (0.077 | ) | $ | (0.054 | ) | $ | (0.078 | ) | $ | (0.090 | ) | |||||
From net realized gain |
(0.016 | ) | (0.015 | ) | (0.225 | ) | (0.046 | ) | (0.114 | ) | ||||||||||
Total distributions |
$ | (0.135 | ) | $ | (0.092 | ) | $ | (0.279 | ) | $ | (0.124 | ) | $ | (0.204 | ) | |||||
Net asset value End of year |
$ | 10.740 | $ | 10.580 | $ | 10.660 | $ | 10.810 | $ | 10.230 | ||||||||||
Total Return(2) |
2.80 | % | 0.12 | % | 1.20 | % | 6.92 | % | 1.69 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 243,950 | $ | 331,625 | $ | 515,694 | $ | 492,264 | $ | 473,976 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses |
0.90 | %(3) | 0.90 | %(3) | 0.88 | %(4) | 0.89 | %(3) | 0.90 | %(4) | ||||||||||
Net investment income |
1.12 | % | 0.72 | % | 0.54 | % | 0.74 | % | 0.83 | % | ||||||||||
Portfolio Turnover |
33 | % | 82 | % | 72 | % | 80 | % | 107 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(4) | Expenses after custodian fee reduction were 0.87% and 0.89% for the years ended January 31, 2013 and 2011, respectively. |
29 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Short-Term Municipal Bond Fund Class C | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 10.560 | $ | 10.640 | $ | 10.820 | $ | 10.240 | $ | 10.270 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income (loss) |
$ | 0.040 | (1) | $ | (0.017 | ) | $ | (0.020 | ) | $ | (0.001 | ) | $ | 0.011 | ||||||
Net realized and unrealized gain (loss) |
0.175 | (0.048 | ) | 0.065 | 0.629 | 0.085 | (2) | |||||||||||||
Total income (loss) from operations |
$ | 0.215 | $ | (0.065 | ) | $ | 0.045 | $ | 0.628 | $ | 0.096 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.039 | ) | $ | (0.000 | )(3) | $ | | $ | (0.002 | ) | $ | (0.012 | ) | ||||||
From net realized gain |
(0.016 | ) | (0.015 | ) | (0.225 | ) | (0.046 | ) | (0.114 | ) | ||||||||||
Total distributions |
$ | (0.055 | ) | $ | (0.015 | ) | $ | (0.225 | ) | $ | (0.048 | ) | $ | (0.126 | ) | |||||
Net asset value End of year |
$ | 10.720 | $ | 10.560 | $ | 10.640 | $ | 10.820 | $ | 10.240 | ||||||||||
Total Return(4) |
2.04 | % | (0.61 | )% | 0.41 | % | 6.14 | % | 0.93 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 106,273 | $ | 142,087 | $ | 223,992 | $ | 185,291 | $ | 150,490 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses |
1.65 | %(5) | 1.65 | %(5) | 1.63 | %(6) | 1.64 | %(5) | 1.64 | %(6) | ||||||||||
Net investment income (loss) |
0.37 | % | (0.03 | )% | (0.21 | )% | (0.01 | )% | 0.08 | % | ||||||||||
Portfolio Turnover |
33 | % | 82 | % | 72 | % | 80 | % | 107 | % |
(1) | Computed using average shares outstanding. |
(2) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(3) | Amount is less than $(0.0005). |
(4) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(6) | Expenses after custodian fee reduction were 1.62% and 1.63% for the years ended January 31, 2013 and 2011, respectively. |
30 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Short-Term Municipal Bond Fund Class I | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 10.590 | $ | 10.660 | $ | 10.810 | $ | 10.230 | $ | 10.260 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.145 | $ | 0.107 | $ | 0.088 | $ | 0.105 | $ | 0.119 | ||||||||||
Net realized and unrealized gain (loss) |
0.177 | (0.059 | ) | 0.068 | 0.626 | 0.082 | (1) | |||||||||||||
Total income from operations |
$ | 0.322 | $ | 0.048 | $ | 0.156 | $ | 0.731 | $ | 0.201 | ||||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.146 | ) | $ | (0.103 | ) | $ | (0.081 | ) | $ | (0.105 | ) | $ | (0.117 | ) | |||||
From net realized gain |
(0.016 | ) | (0.015 | ) | (0.225 | ) | (0.046 | ) | (0.114 | ) | ||||||||||
Total distributions |
$ | (0.162 | ) | $ | (0.118 | ) | $ | (0.306 | ) | $ | (0.151 | ) | $ | (0.231 | ) | |||||
Net asset value End of year |
$ | 10.750 | $ | 10.590 | $ | 10.660 | $ | 10.810 | $ | 10.230 | ||||||||||
Total Return(2) |
3.06 | % | 0.46 | % | 1.45 | % | 7.18 | % | 1.94 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 242,029 | $ | 227,375 | $ | 336,597 | $ | 310,609 | $ | 246,296 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses |
0.65 | %(3) | 0.65 | %(3) | 0.63 | %(4) | 0.64 | %(3) | 0.65 | %(4) | ||||||||||
Net investment income |
1.37 | % | 0.97 | % | 0.79 | % | 0.99 | % | 1.09 | % | ||||||||||
Portfolio Turnover |
33 | % | 82 | % | 72 | % | 80 | % | 107 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(4) | Expenses after custodian fee reduction were 0.62% and 0.64% for the years ended January 31, 2013 and 2011, respectively. |
31 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Intermediate-Term Municipal Bond Fund Class A | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 11.600 | $ | 11.840 | $ | 11.780 | $ | 10.380 | $ | 10.000 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.191 | $ | 0.141 | $ | 0.097 | $ | 0.152 | $ | 0.131 | ||||||||||
Net realized and unrealized gain (loss) |
0.720 | (0.197 | ) | 0.231 | 1.451 | 0.406 | (1) | |||||||||||||
Total income (loss) from operations |
$ | 0.911 | $ | (0.056 | ) | $ | 0.328 | $ | 1.603 | $ | 0.537 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.191 | ) | $ | (0.141 | ) | $ | (0.097 | ) | $ | (0.152 | ) | $ | (0.131 | ) | |||||
From net realized gain |
| (0.043 | ) | (0.171 | ) | (0.051 | ) | (0.026 | ) | |||||||||||
Total distributions |
$ | (0.191 | ) | $ | (0.184 | ) | $ | (0.268 | ) | $ | (0.203 | ) | $ | (0.157 | ) | |||||
Net asset value End of year |
$ | 12.320 | $ | 11.600 | $ | 11.840 | $ | 11.780 | $ | 10.380 | ||||||||||
Total Return(2) |
7.91 | % | (0.44 | )% | 2.79 | % | 15.58 | % | 5.38 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 58,616 | $ | 68,873 | $ | 115,170 | $ | 67,785 | $ | 3,972 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses(3) |
0.92 | %(4) | 0.95 | %(4) | 0.96 | %(5) | 0.95 | %(4) | 0.96 | %(5) | ||||||||||
Net investment income |
1.60 | % | 1.16 | % | 0.80 | % | 1.14 | % | 1.26 | % | ||||||||||
Portfolio Turnover |
77 | % | 145 | % | 103 | % | 125 | % | 202 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser and administrator subsidized certain operating expenses equal to 0.08%, 0.05%, 0.05%, 0.16% and 0.68% of average daily net assets for the years ended January 31, 2015, 2014, 2013, 2012 and 2011, respectively. Absent this subsidy, total return would be lower. |
(4) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(5) | Expenses after custodian fee reduction were 0.95% and 0.95% for the years ended January 31, 2013 and 2011, respectively. |
32 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Intermediate-Term Municipal Bond Fund Class C | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 11.600 | $ | 11.830 | $ | 11.780 | $ | 10.380 | $ | 10.000 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.102 | $ | 0.051 | $ | 0.008 | $ | 0.071 | $ | 0.057 | ||||||||||
Net realized and unrealized gain (loss) |
0.709 | (0.184 | ) | 0.225 | 1.451 | 0.406 | (1) | |||||||||||||
Total income (loss) from operations |
$ | 0.811 | $ | (0.133 | ) | $ | 0.233 | $ | 1.522 | $ | 0.463 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.101 | ) | $ | (0.054 | ) | $ | (0.012 | ) | $ | (0.071 | ) | $ | (0.057 | ) | |||||
From net realized gain |
| (0.043 | ) | (0.171 | ) | (0.051 | ) | (0.026 | ) | |||||||||||
Total distributions |
$ | (0.101 | ) | $ | (0.097 | ) | $ | (0.183 | ) | $ | (0.122 | ) | $ | (0.083 | ) | |||||
Net asset value End of year |
$ | 12.310 | $ | 11.600 | $ | 11.830 | $ | 11.780 | $ | 10.380 | ||||||||||
Total Return(2) |
7.02 | % | (1.10 | )% | 1.98 | % | 14.73 | % | 4.63 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 37,435 | $ | 34,434 | $ | 57,816 | $ | 25,215 | $ | 1,216 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses(3) |
1.67 | %(4) | 1.70 | %(4) | 1.71 | %(5) | 1.70 | %(4) | 1.71 | %(5) | ||||||||||
Net investment income |
0.85 | % | 0.40 | % | 0.04 | % | 0.45 | % | 0.58 | % | ||||||||||
Portfolio Turnover |
77 | % | 145 | % | 103 | % | 125 | % | 202 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser and administrator subsidized certain operating expenses equal to 0.08%, 0.05%, 0.05%, 0.16% and 0.68% of average daily net assets for the years ended January 31, 2015, 2014, 2013, 2012 and 2011, respectively. Absent this subsidy, total return would be lower. |
(4) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(5) | Expenses after custodian fee reduction were 1.70% and 1.70% for the years ended January 31, 2013 and 2011, respectively. |
33 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Intermediate-Term Municipal Bond Fund Class I | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 11.610 | $ | 11.850 | $ | 11.790 | $ | 10.380 | $ | 10.000 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.221 | $ | 0.169 | $ | 0.127 | $ | 0.181 | $ | 0.155 | ||||||||||
Net realized and unrealized gain (loss) |
0.720 | (0.197 | ) | 0.231 | 1.461 | 0.406 | (1) | |||||||||||||
Total income (loss) from operations |
$ | 0.941 | $ | (0.028 | ) | $ | 0.358 | $ | 1.642 | $ | 0.561 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.221 | ) | $ | (0.169 | ) | $ | (0.127 | ) | $ | (0.181 | ) | $ | (0.155 | ) | |||||
From net realized gain |
| (0.043 | ) | (0.171 | ) | (0.051 | ) | (0.026 | ) | |||||||||||
Total distributions |
$ | (0.221 | ) | $ | (0.212 | ) | $ | (0.298 | ) | $ | (0.232 | ) | $ | (0.181 | ) | |||||
Net asset value End of year |
$ | 12.330 | $ | 11.610 | $ | 11.850 | $ | 11.790 | $ | 10.380 | ||||||||||
Total Return(2) |
8.17 | % | (0.19 | )% | 3.05 | % | 15.97 | % | 5.62 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 273,125 | $ | 183,648 | $ | 253,476 | $ | 107,826 | $ | 52,224 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses(3) |
0.67 | %(4) | 0.70 | %(4) | 0.71 | %(5) | 0.70 | %(4) | 0.71 | %(5) | ||||||||||
Net investment income |
1.84 | % | 1.41 | % | 1.04 | % | 1.58 | % | 1.24 | % | ||||||||||
Portfolio Turnover |
77 | % | 145 | % | 103 | % | 125 | % | 202 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | The investment adviser and administrator subsidized certain operating expenses equal to 0.08%, 0.05%, 0.05%, 0.16% and 0.68% of average daily net assets for the years ended January 31, 2015, 2014, 2013, 2012 and 2011, respectively. Absent this subsidy, total return would be lower. |
(4) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(5) | Expenses after custodian fee reduction were 0.70% and 0.70% for the years ended January 31, 2013 and 2011, respectively. |
34 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Long Term Fund Class A | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 10.800 | $ | 11.560 | $ | 11.710 | $ | 9.810 | $ | 10.000 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.293 | $ | 0.235 | $ | 0.182 | $ | 0.249 | $ | 0.268 | ||||||||||
Net realized and unrealized gain (loss) |
1.280 | (0.407 | ) | 0.582 | 1.929 | 0.056 | (1) | |||||||||||||
Total income (loss) from operations |
$ | 1.573 | $ | (0.172 | ) | $ | 0.764 | $ | 2.178 | $ | 0.324 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.293 | ) | $ | (0.235 | ) | $ | (0.182 | ) | $ | (0.249 | ) | $ | (0.267 | ) | |||||
From net realized gain |
| (0.353 | ) | (0.732 | ) | (0.029 | ) | (0.247 | ) | |||||||||||
Total distributions |
$ | (0.293 | ) | $ | (0.588 | ) | $ | (0.914 | ) | $ | (0.278 | ) | $ | (0.514 | ) | |||||
Net asset value End of year |
$ | 12.080 | $ | 10.800 | $ | 11.560 | $ | 11.710 | $ | 9.810 | ||||||||||
Total Return(2) |
14.75 | % | (1.25 | )% | 6.55 | % | 22.53 | % | 3.21 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 7,909 | $ | 5,362 | $ | 14,340 | $ | 16,143 | $ | 149 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses(3) |
0.92 | %(4) | 0.96 | %(5) | 0.96 | %(5) | 0.95 | %(4) | 0.95 | %(4) | ||||||||||
Net investment income |
2.59 | % | 1.89 | % | 1.53 | % | 1.57 | % | 2.65 | % | ||||||||||
Portfolio Turnover |
122 | % | 280 | % | 211 | % | 239 | % | 200 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser and administrator subsidized certain operating expenses equal to 0.56%, 0.49%, 0.35%, 1.21% and 7.17% of average daily net assets for the years ended January 31, 2015, 2014, 2013, 2012 and 2011, respectively. Absent this subsidy, total return would be lower. |
(4) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(5) | Expenses after custodian fee reduction were 0.95% and 0.95% for the years ended January 31, 2014 and 2013, respectively. |
35 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Long Term Fund Class C | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 10.790 | $ | 11.550 | $ | 11.710 | $ | 9.810 | $ | 10.000 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.208 | $ | 0.152 | $ | 0.093 | $ | 0.172 | $ | 0.192 | ||||||||||
Net realized and unrealized gain (loss) |
1.280 | (0.406 | ) | 0.573 | 1.929 | 0.056 | (1) | |||||||||||||
Total income (loss) from operations |
$ | 1.488 | $ | (0.254 | ) | $ | 0.666 | $ | 2.101 | $ | 0.248 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.208 | ) | $ | (0.153 | ) | $ | (0.094 | ) | $ | (0.172 | ) | $ | (0.191 | ) | |||||
From net realized gain |
| (0.353 | ) | (0.732 | ) | (0.029 | ) | (0.247 | ) | |||||||||||
Total distributions |
$ | (0.208 | ) | $ | (0.506 | ) | $ | (0.826 | ) | $ | (0.201 | ) | $ | (0.438 | ) | |||||
Net asset value End of year |
$ | 12.070 | $ | 10.790 | $ | 11.550 | $ | 11.710 | $ | 9.810 | ||||||||||
Total Return(2) |
13.92 | % | (1.99 | )% | 5.76 | % | 21.54 | % | 2.44 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 2,390 | $ | 2,132 | $ | 4,764 | $ | 547 | $ | 141 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses(3) |
1.67 | %(4) | 1.71 | %(5) | 1.71 | %(5) | 1.70 | %(4) | 1.70 | %(4) | ||||||||||
Net investment income |
1.85 | % | 1.22 | % | 0.66 | % | 1.36 | % | 1.88 | % | ||||||||||
Portfolio Turnover |
122 | % | 280 | % | 211 | % | 239 | % | 200 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser and administrator subsidized certain operating expenses equal to 0.56%, 0.49%, 0.36%, 1.21% and 7.17% of average daily net assets for the years ended January 31, 2015, 2014, 2013, 2012 and 2011, respectively. Absent this subsidy, total return would be lower. |
(4) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(5) | Expenses after custodian fee reduction were 1.70% and 1.70% for the years ended January 31, 2014 and 2013, respectively. |
36 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Financial Highlights continued
Long Term Fund Class I | ||||||||||||||||||||
Year Ended January 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Net asset value Beginning of year |
$ | 10.790 | $ | 11.550 | $ | 11.710 | $ | 9.810 | $ | 10.000 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income |
$ | 0.322 | $ | 0.262 | $ | 0.212 | $ | 0.274 | $ | 0.294 | ||||||||||
Net realized and unrealized gain (loss) |
1.280 | (0.407 | ) | 0.572 | 1.929 | 0.056 | (1) | |||||||||||||
Total income (loss) from operations |
$ | 1.602 | $ | (0.145 | ) | $ | 0.784 | $ | 2.203 | $ | 0.350 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income |
$ | (0.322 | ) | $ | (0.262 | ) | $ | (0.212 | ) | $ | (0.274 | ) | $ | (0.293 | ) | |||||
From net realized gain |
| (0.353 | ) | (0.732 | ) | (0.029 | ) | (0.247 | ) | |||||||||||
Total distributions |
$ | (0.322 | ) | $ | (0.615 | ) | $ | (0.944 | ) | $ | (0.303 | ) | $ | (0.540 | ) | |||||
Net asset value End of year |
$ | 12.070 | $ | 10.790 | $ | 11.550 | $ | 11.710 | $ | 9.810 | ||||||||||
Total Return(2) |
15.05 | % | (1.02 | )% | 6.82 | % | 22.71 | % | 3.47 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of year (000s omitted) |
$ | 15,344 | $ | 9,690 | $ | 10,347 | $ | 25,848 | $ | 1,958 | ||||||||||
Ratios (as a percentage of average daily net assets): |
||||||||||||||||||||
Expenses(3) |
0.67 | %(4) | 0.71 | %(5) | 0.71 | %(5) | 0.70 | %(4) | 0.70 | %(4) | ||||||||||
Net investment income |
2.83 | % | 2.41 | % | 1.83 | % | 2.05 | % | 2.86 | % | ||||||||||
Portfolio Turnover |
122 | % | 280 | % | 211 | % | 239 | % | 200 | % |
(1) | The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | The investment adviser and administrator subsidized certain operating expenses equal to 0.56%, 0.49%, 0.34%, 1.21% and 7.17% of average daily net assets for the years ended January 31, 2015, 2014, 2013, 2012 and 2011, respectively. Absent this subsidy, total return would be lower. |
(4) | Excludes the effect of custody fee credits, if any, of less than 0.005%. |
(5) | Expenses after custodian fee reduction were 0.70% and 0.70% for the years ended January 31, 2014 and 2013, respectively. |
37 | See Notes to Financial Statements. |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements
1 Significant Accounting Policies
Eaton Vance Municipals Trust II (the Trust) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Trust presently consists of four funds, three of which, each diversified, are included in these financial statements. They include Eaton Vance TABS Short-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Short Term Fund) (Short-Term Municipal Bond Fund), Eaton Vance TABS Intermediate-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Intermediate Term Fund) (Intermediate-Term Municipal Bond Fund) and Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund (Long Term Fund), (each individually referred to as the Fund, and collectively, the Funds). The Funds investment objective is to seek after-tax total return. The Funds offer three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Net investment income, other than class-specific expenses, is allocated daily to each class of shares based upon the ratio of the value of each classs paid shares to the total value of all paid shares. Each class of shares differs in its distribution plan and certain other class-specific expenses.
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 (U.S. GAAP). Each Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
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, interest rates, anticipated prepayments, 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.
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 securitys 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 securitys 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 entitys 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 Funds 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. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to shareholders.
As of January 31, 2015, 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 Expenses The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E 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 Funds custodian fees are reported as a reduction of expenses in the Statements of Operations.
38 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
F 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.
G Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP 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.
H Indemnifications Under the Trusts organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Funds. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trusts Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust 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 Funds 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.
I 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 Fund maintains 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.
2 Distributions to Shareholders and Income Tax Information
The net investment income of the each Fund is determined daily and substantially all of the net investment income so determined is declared as a dividend to shareholders of record at the time of declaration. Distributions are declared separately for each class of shares. Distributions are paid monthly. Distributions of realized capital gains are made at least annually. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of a Fund at the net asset value as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are 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 January 31, 2015 and January 31, 2014 was as follows:
Year Ended January 31, 2015 | ||||||||||||
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Distributions declared from: |
||||||||||||
Tax-exempt income |
$ | 6,792,220 | $ | 5,406,862 | $ | 546,646 | ||||||
Ordinary income |
$ | 11,730 | $ | | $ | | ||||||
Long-term capital gains |
$ | 870,213 | $ | | $ | |
39 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
Year Ended January 31, 2014 | ||||||||||||
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Distributions declared from: |
||||||||||||
Tax-exempt income |
$ | 5,662,041 | $ | 4,301,320 | $ | 437,522 | ||||||
Ordinary income |
$ | 610,415 | $ | 942,864 | $ | 371,529 | ||||||
Long-term capital gains |
$ | 643,947 | $ | 373,096 | $ | 288,806 |
During the year ended January 31, 2015, the following amounts were reclassified due to differences between book and tax accounting, primarily for accretion of market discount and for the Short-Term Municipal Bond Fund, its use of equalization accounting.
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Change in: |
||||||||||||
Paid-in capital |
$ | 176,323 | $ | | $ | | ||||||
Accumulated net realized gain (loss) |
$ | (163,205 | ) | $ | 9,340 | $ | 3,521 | |||||
Accumulated distributions in excess of net investment income |
$ | (13,118 | ) | $ | (9,340 | ) | $ | (3,521 | ) |
Tax equalization accounting allows the Funds to treat as a distribution that portion of redemption proceeds representing a redeeming shareholders portion of undistributed taxable income and net capital gains. These reclassifications had no effect on the net assets or net asset value per share of the Funds.
As of January 31, 2015, the components of distributable earnings (accumulated losses) and unrealized appreciation (depreciation) on a tax basis were as follows:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Undistributed tax-exempt income |
$ | 67,274 | $ | 312,837 | $ | 13,256 | ||||||
Undistributed long-term capital gains |
$ | 325,750 | $ | | $ | | ||||||
Deferred capital losses |
$ | | $ | (2,590,174 | ) | $ | (241,710 | ) | ||||
Net unrealized appreciation |
$ | 24,403,993 | $ | 20,441,053 | $ | 2,113,550 | ||||||
Other temporary differences |
$ | (134,580 | ) | $ | (327,296 | ) | $ | (13,849 | ) |
The differences between components of distributable earnings (accumulated losses) on a tax basis and the amounts reflected in the Statements of Asset and Liabilities are primarily due to the timing of recognizing distributions to shareholders and accretion of market discount.
At January 31, 2015, the following Funds, for federal income tax purposes, had deferred capital losses which will reduce the respective Funds 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 retain the same short-term or long-term character as when originally deferred.
The amounts of the deferred capital losses are as follows:
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
|||||||
Short-term deferred capital losses |
$ | 2,590,174 | $ | 241,710 |
40 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
The cost and unrealized appreciation (depreciation) of investments of each Fund at January 31, 2015, as determined on a federal income tax basis, were as follows:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Aggregate cost |
$ | 561,429,572 | $ | 322,900,082 | $ | 20,816,062 | ||||||
Gross unrealized appreciation |
$ | 24,403,993 | $ | 20,441,053 | $ | 2,113,550 | ||||||
Gross unrealized depreciation |
| | | |||||||||
Net unrealized appreciation |
$ | 24,403,993 | $ | 20,441,053 | $ | 2,113,550 |
3 Investment Adviser and Administration Fee and Other Transactions with Affiliates
The investment adviser and administration fee is earned by Eaton Vance Management (EVM) as compensation for investment advisory and administrative services rendered to each Fund. The fee is based upon a percentage of average daily net assets as presented in the following table and is payable monthly.
Annual Asset Rate | ||||||||||||
Daily Net Assets | Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
|||||||||
Up to $500 million |
0.55 | % | 0.60 | % | 0.60 | % | ||||||
$500 million up to $1 billion |
0.54 | % | 0.60 | % | 0.60 | % |
On average daily net assets of $1 billion or more, the rates are reduced. For the year ended January 31, 2015, investment adviser and administration fees incurred by the Funds and the effective annual rates, as a percentage of average daily net assets, were as follows:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Investment Adviser and Administration Fee |
$ | 3,494,661 | $ | 1,921,701 | $ | 123,776 | ||||||
Effective Annual Rate |
0.55 | % | 0.60 | % | 0.60 | % |
For Intermediate-Term Municipal Bond Fund and Long Term Fund, EVM has agreed to reimburse the Funds expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 0.90%, 1.65% and 0.65% (0.95%, 1.70% and 0.70% prior to June 1, 2014) of the Funds average daily net assets for Class A, Class C and Class I, respectively. These agreements may be changed or terminated after May 31, 2015. Pursuant to these agreements, EVM was allocated $266,336 and $115,329, respectively, of Intermediate-Term Municipal Bond Funds and Long Term Funds operating expenses for the year ended January 31, 2015.
EVM provides sub-transfer agency and related services to the Funds pursuant to a Sub-Transfer Agency Support Services Agreement. Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Funds principal underwriter, received a portion of the sales charges on sales of Class A shares of the Funds. EVD also received distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
41 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
Sub-transfer agent fees earned by EVM, which are included in transfer and dividend disbursing agent fees on the Statements of Operations, and Class A sales charges that the Funds were informed were received by EVD for the year ended January 31, 2015 were as follows:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
EVMs Sub-Transfer Agent Fees |
$ | 3,313 | $ | 1,303 | $ | 515 | ||||||
EVDs Class A Sales Charges |
$ | 5,659 | $ | 5,860 | $ | 2,995 |
Trustees and officers of the Funds who are members of EVMs organization receive remuneration for their services to the Funds out of the investment adviser and administration fee. Trustees of the Funds who are not affiliated with EVM 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 January 31, 2015, no significant amounts have been deferred. Certain officers and Trustees of the Funds are officers of EVM.
4 Distribution Plans
Each Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, each Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to each Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the year ended January 31, 2015 for Class A shares amounted to the following:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Class A Distribution and Service Fees |
$ | 718,878 | $ | 159,100 | $ | 14,071 |
Each Fund also has in effect a distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, each Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing distribution services and facilities to the Funds. For the year ended January 31, 2015, the Funds paid or accrued to EVD the following distribution fees:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Class C Distribution Fees |
$ | 911,841 | $ | 258,656 | $ | 16,878 |
Pursuant to the Class C Plan, the Funds also make payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of the average daily net assets attributable to Class C shares. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the year ended January 31, 2015 amounted to the following:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Class C Service Fees |
$ | 303,947 | $ | 86,219 | $ | 5,626 |
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authoritys NASD Conduct Rule 2830(d).
42 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is imposed on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within eighteen months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the year ended January 31, 2015, the Funds were informed that EVD received approximately the following amounts of CDSCs paid by Class A and Class C shareholders:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Class A |
$ | 9,000 | $ | 20,000 | $ | | ||||||
Class C |
$ | 9,000 | $ | 10 | $ | |
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, for the year ended January 31, 2015 were as follows:
Short-Term Municipal Bond Fund |
Intermediate- Term Municipal Bond Fund |
Long Term Fund |
||||||||||
Purchases |
$ | 206,051,129 | $ | 295,444,372 | $ | 28,103,520 | ||||||
Sales |
$ | 305,124,295 | $ | 233,811,181 | $ | 24,202,810 |
7 Shares of Beneficial Interest
Each Funds Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Funds) and classes. Transactions in Fund shares were as follows:
Short-Term Municipal Bond Fund |
||||||||||||
Year Ended January 31, 2015 | ||||||||||||
Class A | Class C | Class I | ||||||||||
Sales |
3,407,571 | 626,175 | 9,357,723 | |||||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
286,658 | 48,151 | 200,734 | |||||||||
Redemptions |
(12,321,631 | ) | (4,215,813 | ) | (8,515,072 | ) | ||||||
Net increase (decrease) |
(8,627,402 | ) | (3,541,487 | ) | 1,043,385 | |||||||
Year Ended January 31, 2014 | ||||||||||||
Class A | Class C | Class I | ||||||||||
Sales |
8,132,945 | 2,232,137 | 9,841,829 | |||||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
292,213 | 21,930 | 174,551 | |||||||||
Redemptions |
(25,461,178 | ) | (9,849,619 | ) | (20,099,982 | ) | ||||||
Net decrease |
(17,036,020 | ) | (7,595,552 | ) | (10,083,602 | ) |
43 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
Intermediate-Term Municipal Bond Fund |
||||||||||||
Year Ended January 31, 2015 | ||||||||||||
Class A | Class C | Class I | ||||||||||
Sales |
1,882,799 | 821,312 | 11,424,387 | |||||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
59,954 | 11,275 | 80,335 | |||||||||
Redemptions |
(3,122,032 | ) | (762,072 | ) | (5,169,721 | ) | ||||||
Net increase (decrease) |
(1,179,279 | ) | 70,515 | 6,335,001 | ||||||||
Year Ended January 31, 2014 | ||||||||||||
Class A | Class C | Class I | ||||||||||
Sales |
3,051,743 | 693,486 | 9,639,318 | |||||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
95,932 | 16,005 | 75,958 | |||||||||
Redemptions |
(6,939,785 | ) | (2,626,036 | ) | (15,291,701 | ) | ||||||
Net decrease |
(3,792,110 | ) | (1,916,545 | ) | (5,576,425 | ) | ||||||
Long Term Fund |
||||||||||||
Year Ended January 31, 2015 | ||||||||||||
Class A | Class C | Class I | ||||||||||
Sales |
418,466 | 82,599 | 553,610 | |||||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
12,609 | 3,566 | 16,612 | |||||||||
Redemptions |
(272,858 | ) | (85,809 | ) | (196,981 | ) | ||||||
Net increase |
158,217 | 356 | 373,241 | |||||||||
Year Ended January 31, 2014 | ||||||||||||
Class A | Class C | Class I | ||||||||||
Sales |
409,064 | 52,619 | 401,576 | |||||||||
Issued to shareholders electing to receive payments of distributions in Fund shares |
32,781 | 12,948 | 27,636 | |||||||||
Redemptions |
(1,185,660 | ) | (280,259 | ) | (426,741 | ) | ||||||
Net increase (decrease) |
(743,815 | ) | (214,692 | ) | 2,471 |
At January 31, 2015, EVM owned 24.6% of the value of the outstanding shares of Long Term Fund.
8 Line of Credit
The Funds participate with other portfolios and funds managed by EVM and its affiliates in a $750 million unsecured line of credit agreement with a group of banks. Borrowings are made by the Funds solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each Fund based on its borrowings at an amount above either the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an annual rate of 0.08% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. Because the line of credit is not available exclusively to the Funds, a Fund may be unable to borrow some or all of its requested amounts at any particular time. The Funds did not have any significant borrowings or allocated fees during the year ended January 31, 2015.
44 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Notes to Financial Statements continued
9 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.
| Level 1 quoted prices in active markets for identical investments |
| Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| Level 3 significant unobservable inputs (including a funds 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 January 31, 2015, the hierarchy of inputs used in valuing the Funds investments, which are carried at value, were as follows:
Short-Term Municipal Bond Fund |
||||||||||||||||
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Tax-Exempt Municipal Securities |
$ | | $ | 585,588,713 | $ | | $ | 585,588,713 | ||||||||
Taxable Municipal Securities |
| 244,852 | | 244,852 | ||||||||||||
Total Investments |
$ | | $ | 585,833,565 | $ | | $ | 585,833,565 | ||||||||
Intermediate-Term Municipal Bond Fund |
||||||||||||||||
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Tax-Exempt Investments |
$ | | $ | 343,341,135 | $ | | $ | 343,341,135 | ||||||||
Total Investments |
$ | | $ | 343,341,135 | $ | | $ | 343,341,135 | ||||||||
Long Term Fund |
||||||||||||||||
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Tax-Exempt Investments |
$ | | $ | 22,929,612 | $ | | $ | 22,929,612 | ||||||||
Total Investments |
$ | | $ | 22,929,612 | $ | | $ | 22,929,612 |
The Funds held no investments or other financial instruments as of January 31, 2014 whose fair value was determined using Level 3 inputs. At January 31, 2015, there were no investments transferred between Level 1 and Level 2 during the year then ended.
10 Name Change
Effective February 17, 2015, the name of Eaton Vance TABS Short-Term Municipal Bond Fund was changed from Eaton Vance Tax-Advantaged Bond Strategies Short Term Fund and Eaton Vance TABS Intermediate-Term Municipal Bond Fund was changed from Eaton Vance Tax-Advantaged Bond Strategies Intermediate Term Fund.
11 Subsequent Event
Effective April 15, 2015, the investment objective of Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund will change from seeking after-tax total return to seeking current income exempt from regular federal income tax and the Fund will invest principally in a laddered portfolio of municipal obligations. In connection with the change in the Funds investment objective and principal investment strategies, the name of the Fund will change to Eaton Vance TABS 5-to-15 Year Laddered Municipal Bond Fund.
45 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Report of Independent Registered Public Accounting Firm
To the Trustees of Eaton Vance Municipals Trust II and Shareholders of Eaton Vance TABS Short-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Short Term Fund), Eaton Vance TABS Intermediate-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Intermediate Term Fund), and Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund:
We have audited the accompanying statements of assets and liabilities of Eaton Vance TABS Short-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Short Term Fund), Eaton Vance TABS Intermediate-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Intermediate Term Fund), and Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund (collectively, the Funds) (certain of the funds constituting Eaton Vance Municipals Trust II), including the portfolios of investments, as of January 31, 2015, and the related statements of operations 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 January 31, 2015, 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, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Eaton Vance TABS Short-Term Municipal Bond Fund, Eaton Vance TABS Intermediate-Term Municipal Bond Fund, and Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund as of January 31, 2015, the results of their operations 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
March 19, 2015
46 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Federal Tax Information (Unaudited)
The Form 1099-DIV you receive in February 2016 will show the tax status of all distributions paid to your account in calendar year 2015. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in a Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding exempt-interest dividends and capital gains dividends.
Exempt-Interest Dividends. For the fiscal year ended January 31, 2015, the Funds designate the following percentages of distributions from net investment income as exempt-interest dividends:
TABS Short-Term Municipal Bond Fund |
99.83 | % | ||
TABS Intermediate-Term Municipal Bond Fund |
100.00 | % | ||
Tax-Advantaged Bond Strategies Long Term Fund |
100.00 | % |
Capital Gains Dividends. The TABS Short-Term Municipal Bond Fund hereby designates as capital gains dividend with respect to the taxable year ended January 31, 2015, $1,372,286 or, if subsequently determined to be different, the net capital gain of such year.
47 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Management and Organization
Fund Management. The Trustees of Eaton Vance Municipals Trust II (the Trust) are responsible for the overall management and supervision of the Trusts affairs. The Trustees and officers of the Trust 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. Trustees and officers of the Trust hold indefinite terms of office. The Noninterested Trustees consist of those Trustees who are not interested persons of the Trust, 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 the Funds principal underwriter and 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 178 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 and officer serves until his or her successor is elected.
Name and Year of Birth | Position(s) with the |
Trustee Since(1) |
Principal Occupation(s) and Directorships During Past Five Years and Other Relevant Experience | |||
Interested Trustee | ||||||
Thomas E. Faust Jr. 1958 |
Trustee | 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 178 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 Trust. Directorships in the Last Five Years.(2) Director of EVC and Hexavest Inc. | |||
Noninterested Trustees | ||||||
Scott E. Eston 1956 |
Trustee | 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.(2) None. | |||
Cynthia E. Frost(3) 1961 |
Trustee | 2014 | Private investor. Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012); Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000); Managing Director, Cambridge Associates (1989-1995); Consultant, Bain and Company (1987-1989); Senior Equity Analyst, BA Investment Management Company (1983-1985). Directorships in the Last Five Years. None. | |||
George J. Gorman(3) 1952 |
Trustee | 2014 | Principal at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (public accounting firm) (1974-2009). Directorships in the Last Five Years. Formerly, Trustee of the Bank of America Money Market Funds Series Trust (2011-2014) and of the Ashmore Funds (2010-2014). | |||
Valerie A. Mosley 1960 |
Trustee | 2014 | Chairwoman and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Former Partner and Senior Vice President, Portfolio Manager and Investment Strategist at Wellington Management Company, LLP (investment management firm) (1992-2012). Former Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990). Directorships in the Last Five Years.(2) Director of Dynex Capital, Inc. (mortgage REIT) (since 2013). | |||
William H. Park 1947 |
Trustee | 2003 | Private investor. Formerly, Consultant (2012-2014). 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.(2) None. |
48 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Management and Organization continued
Name and Year of Birth | Position(s) with the |
Trustee Since(1) |
Principal Occupation(s) and Directorships During Past Five Years and Other Relevant Experience | |||
Noninterested Trustees (continued) | ||||||
Ronald A. Pearlman 1940 |
Trustee | 2003 | Lawyer and consultant. Formerly, Professor of Law, Georgetown University Law Center (1999-2014). Formerly, Partner, Covington & Burling LLP (law firm) (1991-2000). Formerly, Chief of Staff, Joint Committee on Taxation, U.S. Congress (1988-1990). Formerly, Deputy Assistant Secretary (Tax Policy) and Assistant Secretary (Tax Policy), U.S. Department of the Treasury (1983-1985). Directorships in the Last Five Years.(2) None. | |||
Helen Frame Peters 1948 |
Trustee | 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.(2) Formerly, Director of BJs 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). | |||
Harriett Tee Taggart 1948 |
Trustee | 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.(2) 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 1943 |
Chairman of the Board and Trustee |
2007 (Chairman) 2005 (Trustee) |
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.(2) None. | |||
Principal Officers who are not Trustees | ||||||
Name and Year of Birth | Position(s) with the Trust |
Officer Since(4) |
Principal Occupation(s) During Past Five Years | |||
Payson F. Swaffield 1956 |
President | 2003 | Vice President and Chief Income Investment Officer of EVM and BMR. | |||
Maureen A. Gemma 1960 |
Vice President, Secretary and Chief Legal Officer | 2005 | Vice President of EVM and BMR. | |||
James F. Kirchner 1967 |
Treasurer | 2007 | Vice President of EVM and BMR. | |||
Paul M. ONeil 1953 |
Chief Compliance Officer | 2004 | Vice President of EVM and BMR. |
(1) | Year first appointed to serve as Trustee for a fund in the Eaton Vance family of funds. Each Trustee has served continuously since appointment unless indicated otherwise. |
(2) | During their respective tenures, the Trustees (except for Ms. Frost and Mr. Gorman) also served as Board members of one or more of the following funds (which operated in the years noted): eUnitsTM 2 Year U.S. Market Participation Trust: Upside to Cap / Buffered Downside (launched in 2012 and terminated in 2014); eUnitsTM 2 Year U.S. Market Participation Trust II: Upside to Cap / Buffered Downside (launched in 2012 and terminated in 2014); 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). However, Ms. Mosley did not serve as a Board member of eUnitsTM 2 Year U.S. Market Participation Trust: Upside to Cap / Buffered Downside (launched in 2012 and terminated in 2014). |
(3) | Ms. Frost and Mr. Gorman began serving as Trustees effective May 29, 2014. |
49 |
Eaton Vance
Tax-Advantaged Bond Strategies Funds
January 31, 2015
Management and Organization continued
(4) | Year first elected to serve as officer of a fund in the Eaton Vance family of funds when the officer has served continuously. Otherwise, year of most recent election as an officer of a fund in the Eaton Vance family of funds. Titles may have changed since initial election. |
The SAI for the Funds includes additional information about the Trustees and officers of the Funds and can be obtained without charge on Eaton Vances website at www.eatonvance.com or by calling 1-800-262-1122.
50 |
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:
| 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. |
| 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 customers account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
| Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
| 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 Managements 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 customers account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisors privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vances 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 SECs website at www.sec.gov. Form N-Q may also be reviewed and copied at the SECs 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 SECs website at www.sec.gov.
51 |
This Page Intentionally Left Blank
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing the program is available to investors at www.FINRA.org. |
6096 1.31.15 |
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 registrants 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 private investor. Previously, he served as a consultant, 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)
Eaton Vance High Yield Municipal Income Fund, Eaton Vance TABS Intermediate-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Intermediate Term Fund), Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund, and Eaton Vance TABS Short-Term Municipal Bond Fund (formerly, Eaton Vance Tax-Advantaged Bond Strategies Short Term Fund) (the Fund(s)) are series of Eaton Vance Municipals Trust II (the Trust), a Massachusetts business trust, which, including the Funds, contains a total of 4 series (the Series). The Trust is registered under the Investment Company Act of 1940 as an open-end management investment company.
The following tables present the aggregate fees billed to each Fund for the Funds fiscal years ended January 31, 2014 and January 31, 2015 by the Funds principal accountant, Deloitte & Touche LLP (D&T), for professional services rendered for the audit of the Funds annual financial statements and fees billed for other services rendered by D&T during such periods.
Eaton Vance High Yield Municipal Income Fund
Fiscal Years Ended |
1/31/14 | 1/31/15 | ||||||
Audit Fees |
$ | 78,370 | $ | 79,370 | ||||
Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
Tax Fees(2) |
$ | 14,740 | $ | 15,520 | ||||
All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|||||
Total |
$ | 93,110 | $ | 94,890 | ||||
|
|
|
|
Eaton Vance TABS Intermediate-Term Municipal Bond Fund
(formerly, Eaton Vance Tax-Advantaged Bond Strategies Intermediate Term Fund)
Fiscal Years Ended |
1/31/14 | 1/31/15 | ||||||
Audit Fees |
$ | 33,870 | $ | 34,970 | ||||
Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
Tax Fees(2) |
$ | 8,690 | $ | 9,450 | ||||
All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|||||
Total |
$ | 42,560 | $ | 44,420 | ||||
|
|
|
|
Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund
Fiscal Years Ended |
1/31/14 | 1/31/15 | ||||||
Audit Fees |
$ | 18,870 | $ | 19,470 | ||||
Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
Tax Fees(2) |
$ | 8,690 | $ | 9,450 | ||||
All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|||||
Total |
$ | 27,560 | $ | 28,920 | ||||
|
|
|
|
Eaton Vance TABS Short-Term Municipal Bond Fund
(formerly, Eaton Vance Tax-Advantaged Bond Strategies Short Term Fund)
Fiscal Years Ended |
1/31/14 | 1/31/15 | ||||||
Audit Fees |
$ | 35,640 | $ | 35,640 | ||||
Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
Tax Fees(2) |
$ | 8,690 | $ | 9,950 | ||||
All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|||||
Total |
$ | 44,330 | $ | 45,590 | ||||
|
|
|
|
(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 financial statements and are not reported under the category of audit fees. |
(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. |
The Funds comprised all of the series of the Trust at 1/31/2015, and have the same fiscal year end (January 31). The following table presents the aggregate audit, audit-related, tax, and other fees billed to all of the Series in the Trust by D&T for the last two fiscal years of each Series.
Fiscal Years Ended |
1/31/14 | 1/31/15 | ||||||
Audit Fees |
$ | 166,750 | $ | 169,450 | ||||
Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
Tax Fees(2) |
$ | 40,810 | $ | 44,370 | ||||
All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|||||
Total |
$ | 207,560 | $ | 213,820 | ||||
|
|
|
|
(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 financial statements and are not reported under the category of audit fees. |
(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 registrants audit committee has adopted policies and procedures relating to the pre-approval of services provided by the registrants 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 registrants audit committee at least annually. The registrants audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrants principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the registrants 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 for services rendered to all of the Series in the Trust by D&T for the last two fiscal years of each Series; 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 last two fiscal years of each Series.
Fiscal Years Ended |
1/31/14 | 1/31/15 | ||||||
Registrant(1) |
$ | 40,810 | $ | 44,370 | ||||
Eaton Vance(2) |
$ | 370,325 | $ | 99,750 |
(1) | Includes all of the Series of the Trust. |
(2) | The investment adviser to the Series, as well as any of its affiliates that provide ongoing services to the Series, are subsidiaries of Eaton Vance Corp. |
(h) The registrants audit committee has considered whether the provision by the registrants principal accountant of non-audit services to the registrants 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 accountants independence.
Item 5. Audit Committee of Listed Registrant
Not applicable.
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
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
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 registrants principal executive officer and principal financial officer that the effectiveness of the registrants 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 Commissions rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrants principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrants 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 registrants internal control over financial reporting.
Item 12. Exhibits
(a)(1) |
Registrants Code of Ethics Not applicable (please see Item 2). | |
(a)(2)(i) |
Treasurers Section 302 certification. | |
(a)(2)(ii) |
Presidents 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 Municipals Trust II
By: | /s/ Payson F. Swaffield | |
Payson F. Swaffield | ||
President | ||
Date: | March 13, 2015 |
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: | March 13, 2015 | |
By: | /s/ Payson F. Swaffield | |
Payson F. Swaffield | ||
President | ||
Date: | March 13, 2015 |
EATON VANCE MUNICIPALS TRUST II
FORM N-CSR
Exhibit 12(a)(2)(i)
CERTIFICATION
I, James F. Kirchner, certify that:
1. I have reviewed this report on Form N-CSR of Eaton Vance Municipals Trust II;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: March 13, 2015
/s/ James F. Kirchner |
James F. Kirchner |
Treasurer |
EATON VANCE MUNICIPALS TRUST II
FORM N-CSR
Exhibit 12(a)(2)(ii)
CERTIFICATION
I, Payson F. Swaffield, certify that:
1. I have reviewed this report on Form N-CSR of Eaton Vance Municipals Trust II;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: March 13, 2015
/s/ Payson F. Swaffield |
Payson F. Swaffield |
President |
Form N-CSR Item 12(b) Exhibit
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certify in their capacity as Treasurer and President, respectively, of Eaton Vance Municipals Trust II (the Trust) that:
(a) | the Annual Report of the Trust on Form N-CSR for the period ended January 31, 2015 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(b) | the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Trust for such period. |
A signed original of this written statement required by section 906 has been provided to the Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission or its staff upon request.
Eaton Vance Municipals Trust II
Date: March 13, 2015
/s/ James F. Kirchner |
James F. Kirchner |
Treasurer |
Date: March 13, 2015 |
/s/ Payson F. Swaffield |
Payson F. Swaffield |
President |
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