[EATON VANCE LOGO]
[EDUCATION SIGN]
SEMIANNUAL REPORT MAY 31, 2001
[CARSON HIGHWAY]
EATON VANCE
MUNICIPAL
INCOME
TRUST
[BRIDGE]
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
LETTER TO SHAREHOLDERS
[PHOTO]
THOMAS J. FETTER
PRESIDENT
The municipal bond market has long been the primary source of funding in the
U.S. for state and local public projects. Understandably, given the vast size
and complicated nature of this arena, market participants require sound criteria
to determine credit quality, assess risk and establish consistent benchmarks for
valuations. Determining credit quality is, therefore, a critical function, a
role played, in part, by ratings agencies, including the acknowledged market
leaders, Standard & Poor's (S&P) and Moody's Investors Service, Inc. (Moody's).
Rating agencies produce widely recognized credit standards...
Just as loan officers review the creditworthiness of mortgage applicants, rating
agencies have established credit standards that are used to analyze municipal
and corporate borrowers. Approximately 97% of the municipal bonds issued in 2000
were accorded a rating from a major rating agency.
The agencies base their ratings on many considerations, including:
- The capacity of the borrower to make timely interest payments and repay
principal;
- The maturity and nature of the debt obligation;
- Protective covenants for lenders in the event of bankruptcy or a
significant change in the borrower's revenue outlook.
From AAA to BBB, ratings provide an objective assessment of credit risk...
Bonds rated BBB(S&P)/Baa(Moody's) or above are considered investment-grade, with
bonds rated AAA(S&P)/Aaa(Moody's) deemed to be of the highest quality and AA/Aa
rated bonds considered high quality. Bonds rated below BBB/Baa are
non-investment grade, with incremental gradations below that tier reflecting
different levels of risk. Ratings are subject to routine follow-up reviews and
may be changed or withdrawn due to changes in an issuer's underlying
fundamentals or other pertinent circumstances. Typically, bonds may rise or fall
in value in anticipation of upgrades or downgrades.
MUNICIPAL BOND YIELDS WERE NEARLY 94% OF TREASURY YIELDS
5.39% 8.92%
30-YEAR AAA-RATED TAXABLE EQUIVALENT YIELD
GENERAL OBLIGATIONS (GO) BONDS* IN 39.4% TAX BRACKET
5.75%
30-YEAR TREASURY BOND
PRINCIPAL AND INTEREST PAYMENTS OF TREASURY SECURITIES ARE GUARANTEED BY THE
U.S. GOVERNMENT.
*GO YIELDS ARE A COMPILATION OF A REPRESENTATIVE VARIETY OF GENERAL OBLIGATIONS
AND ARE NOT NECESSARILY REPRESENTATIVE OF THE TRUST'S YIELD. STATISTICS AS OF
MAY 31, 2001.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
SOURCE: BLOOMBERG, L.P.
The higher the credit rating, the lower the interest rate...
Accordingly, an issuer with a AAA rating can be expected to issue new bonds at
or near the lowest prevailing interest rate. Conversely, an issuer with a lower
credit rating will be required to pay higher rates. In the secondary market,
higher-rated bonds in a given category typically trade at higher prices and,
therefore, have lower yields than bonds of lower quality. These yield
differentials are called "quality spreads," usually characterized in basis
points. (A basis point equals .01%). Spreads among differently rated bonds may
vary with changes in supply, market fundamentals and investor sentiment, and
such fluctuations play a major role in bond investment strategy.
Ratings are an invaluable tool for issuers and investors alike...
Ratings issued by major agencies do not represent a recommendation to buy or
sell, nor are they a judgment as to a bond's suitability as an investment. They
are, however, a much-needed tool used to evaluate bonds in the marketplace. The
existence of a clearly defined rating system contributes to orderly and
transparent markets, which is important for issuers and investors alike.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
July 11, 2001
2
MANAGEMENT DISCUSSION
[PHOTO]
THOMAS M. METZOLD
PORTFOLIO MANAGER
INVESTMENT ENVIRONMENT
- Toward the end of 2000, most economic indicators pointed to a faltering
U.S. economy. Declining corporate profits, mounting job layoffs and a
sharply falling stock market exacted a heavy toll on consumer confidence.
According to revised Commerce Department figures, fourth quarter 2000 Gross
Domestic Product grew at a tepid 1.0% pace. That was followed by a
lackluster 1.3% growth rate in the first quarter of 2001.
- The Fed signaled an easier monetary policy in the second half of 2000.
Taking its cue, the bond markets, which move in the opposite direction of
interest rates, rallied into early 2001. Against this backdrop, with
inflation posing little threat, the Federal Reserve launched an aggressive
effort to jump-start the economy. Beginning in early January, the Fed
initiated a series of interest rate cuts and, by the end of June, had
reduced its benchmark Federal Funds rate - a key short-term interest rate
barometer - to 3.75%.
THE TRUST
PERFORMANCE FOR THE PAST YEAR
- Based on share price (traded on the New York Stock Exchange), the Trust had
a total return of 15.50% for the six months ended May 31, 2001. That return
was the result of an increase in share price from $11.125 on November 30,
2000 to $12.47 on May 31, 2001, and the reinvestment of $0.373 in regular
monthly dividends.
- Based on net asset value, the Trust had a total return of 7.10% for the six
months ended May 31, 2001. That return was the result of an increase in net
asset value per share from $11.95 on November 30, 2000 to $12.42 on May 31,
2001, and the reinvestment of all distributions.
- Based on the most recent dividend and a share price of $12.47 the Trust had
a market yield of 5.98% at May 31, 2001.(1) The Trust's market yield is
equivalent to a taxable yield of 9.90%.(2)
MANAGEMENT DISCUSSION
- The Trust's largest concentration was in hospital bonds. Management
remained very selective with respect to hospital investments, focusing on
competitive institutions, including Oneonta, Alabama, Eastern Health Care
Facility bonds that have a favorable cost structure and a good market
position.
- General obligation bonds were one of the Trust's largest category
weightings at May 31. Florida and Texas school district issues, for
example, provided excellent quality and good liquidity, characteristics
valued in any interest rate environment.
- Management continued its efforts to improve the Trust's call protection.
With the decline of interest rates from their highs earlier in the decade,
call protection therefore becomes an increasingly important strategic
consideration.
- The uncertainties in the economy have helped make municipal bonds an
attractive investment option. While there are scenarios on the supply side
that bear watching, we believe that bonds continue to offer good income
opportunities and a measure of refuge from recent market volatility.
LARGEST CATEGORIES(3)
BY TOTAL NET ASSETS
HOSPITAL 15.9%
INSURED TRANSPORTATION* 10.8%
INDUSTRIAL DEVELOPMENT REVENUE 9.4%
GENERAL OBLIGATIONS 9.1%
HOUSING 6.5%
*May not represent the Portfolio's current or future investments.
SHARES OF THE TRUST 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. YIELDS WILL
VARY.
TRUST INFORMATION AS OF MAY 31, 2001
PERFORMANCE(4)
Average Annual Total Returns (by market value, New York Stock Exchange)
--------------------------------------------------------------------------------
One Year 25.63%
Life of Trust (1/29/99) -1.83%
Average Annual Total Returns (at net asset value)
--------------------------------------------------------------------------------
One Year 22.15%
Life of Trust (1/29/99) -2.00%
RATING DISTRIBUTION(3)
[CHART]
NON-RATED 27.7%
AAA 34.4%
AA 16.6%
A 3.2%
BBB 17.2%
B 0.9%
(1) The Trust's market yield is calculated by dividing the most recent dividend
per share by the share price at the end of the period and annualizing the
result.
(2) Taxable-equivalent yield assumes maximum 39.6% federal income tax rate. A
lower rate would result in a lower tax-equivalent figure.
(3) Rating Distribution and Largest Categories are determined by dividing the
total market value of the holdings by the total net assets of the Trust.
Rating Distribution and Largest Categories are subject to change.
(4) Returns are historical and are calculated by determining the percentage
change in share price or net asset value with all distributions reinvested.
Past performance is no guarantee of future results. Investment return and
market price will fluctuate so that shares, when sold, may be worth more or
less than their original cost.
3
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
PORTFOLIO OF INVESTMENTS (UNAUDITED)
TAX-EXEMPT INVESTMENTS -- 99.0%
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Certificates of Participation -- 0.5%
-------------------------------------------------------------------------
$ 1,960 Cliff House Trust, PA, (AMT),
6.625%, 6/1/27 $ 1,777,426
-------------------------------------------------------------------------
$ 1,777,426
-------------------------------------------------------------------------
Cogeneration -- 0.9%
-------------------------------------------------------------------------
$ 2,950 Maryland Energy Cogeneration, (AES
Warrior Run), (AMT), 7.40%, 9/1/19 $ 3,047,527
-------------------------------------------------------------------------
$ 3,047,527
-------------------------------------------------------------------------
Education -- 4.7%
-------------------------------------------------------------------------
$ 3,000 California Educational Facilities
Authority, Residual Certificates,
Variable Rate, 12/1/32(1)(2) $ 2,992,080
3,185 Florida Capital Projects Finance
Authority, Student Housing Revenue,
(Florida University), 7.75%, 8/15/20 3,173,407
6,875 Massachusetts Development Finance
Agency, (Boston University),
5.45%, 5/15/59 6,574,837
3,250 New York Dormitory Authority, (State
University Educational Facilities),
4.75%, 5/15/28 2,940,210
-------------------------------------------------------------------------
$ 15,680,534
-------------------------------------------------------------------------
Electric Utilities -- 5.3%
-------------------------------------------------------------------------
$ 8,000 Brazos River Authority, TX, (Reliant
Energy, Inc.), (AMT), 5.375%, 4/1/19 $ 7,448,080
1,500 North Carolina Eastern Municipal Power
Agency, 5.75%, 1/1/26 1,442,715
7,250 North Carolina Municipal Power Agency,
(Catawba), 6.50%, 1/1/20 7,580,672
1,200 Santa Cruz County, AZ, IDA, (Citizens
Utilities Co.), (AMT), 7.15%, 2/1/23 1,186,812
-------------------------------------------------------------------------
$ 17,658,279
-------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.2%
-------------------------------------------------------------------------
$35,000 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity, 0.00%, 10/1/22 $ 8,571,150
1,725 Maricopa County, AZ, IDA, (Place Five
and The Greenery), Escrowed to Maturity,
8.625%, 1/1/27 2,145,831
-------------------------------------------------------------------------
$ 10,716,981
-------------------------------------------------------------------------
General Obligations -- 9.1%
-------------------------------------------------------------------------
$ 3,280 Bell Mountain Ranch, CO, Metropolitan
District, 6.625%, 11/15/25 $ 3,122,101
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
General Obligations (continued)
-------------------------------------------------------------------------
$ 500 California, Variable Rate, 12/1/23(1)(3) $ 828,700
3,500 California, Residual Certificates,
Variable Rate, 9/1/30(1)(2) 3,429,230
12,985 Florida Board of Education,
4.75%, 6/1/28(4) 11,760,385
4,000 Kershaw County, SC, School District,
5.00%, 2/1/18 3,966,240
8,500 North East Independent School District,
TX, 4.50%, 10/1/28 7,227,125
-------------------------------------------------------------------------
$ 30,333,781
-------------------------------------------------------------------------
Hospital -- 15.9%
-------------------------------------------------------------------------
$ 2,500 California Health Facilities Authority,
(Cedars Sinai Medical Center), Variable
Rate, 12/1/34(1)(3) $ 2,745,250
1,000 Chautauqua County, NY, IDA, (Women's
Christian Association), 6.35%, 11/15/17 879,420
1,000 Chautauqua County, NY, IDA, (Women's
Christian Association), 6.40%, 11/15/29 842,790
1,410 Colorado Health Facilities Authority,
(Rocky Mountain Adventist),
6.625%, 2/1/22 1,439,398
1,000 Halifax, FL, Medical Center,
7.25%, 10/1/24 976,800
2,870 Highland County, OH, (Joint Township
Hospital District), 6.75%, 12/1/29 2,569,080
3,500 John Tolfree Health System Corp., MI,
6.00%, 9/15/23 2,981,930
1,215 Loris, SC, Community Hospital District,
5.625%, 1/1/20 1,063,246
3,500 Loris, SC, Community Hospital District,
5.625%, 1/1/29 2,915,325
5,750 Louisiana Public Facilities Authority,
(Tuoro Infirmary), 5.625%, 8/15/29 5,495,447
2,000 Martin County, MN, (Fairmont Community
Hospital Association ), 6.625%, 9/1/22 1,813,200
6,000 Massachusetts HEFA, (Partners Healthcare
System), 5.25%, 7/1/29(4) 5,517,780
1,700 Mecosta County, MI, General Hospital,
5.75%, 5/15/09 1,635,043
2,500 Mecosta County, MI, General Hospital,
6.00%, 5/15/18 2,247,125
4,260 New Jersey Health Care Facilities
Financing Authority, (Capital Health
System), 5.25%, 7/1/27 3,161,261
4,000 New Jersey Health Care Facilities
Financing Authority, (St. Barnabas
Medical Center),
Variable Rate, 7/1/28(1)(2) 3,435,880
1,500 New Jersey Health Care Facilities
Financing Authority, (Trinitas
Hospital), 7.50%, 7/1/30 1,505,445
SEE NOTES TO FINANCIAL STATEMENTS
4
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Hospital (continued)
-------------------------------------------------------------------------
$ 1,585 Oneonta, AL, Eastern Health Care
Facility Financing Authority, (Eastern
Health Systems, Inc.), 7.75%, 7/1/21 $ 1,646,958
7,000 Rhode Island HEFA, (St. Joseph Health
Services), 5.50%, 10/1/29 5,357,730
2,425 Southwestern Illinois, Development
Authority, (Anderson Hospital),
5.625%, 8/15/29 2,032,295
3,000 Weber County, UT, (IHC Health Services,
Inc.), 5.00%, 8/15/30 2,736,360
-------------------------------------------------------------------------
$ 52,997,763
-------------------------------------------------------------------------
Housing -- 6.5%
-------------------------------------------------------------------------
$ 990 California Statewide Communities
Development Authority, Variable Rate,
6/1/09(1)(3) $ 1,045,905
4,000 Charter Mac Equity Trust, TN, (AMT),
6.625%, 6/30/09 3,992,440
980 Lake Creek, CO, Affordable Housing
Corp., Multifamily, 7.00%, 12/1/23 929,158
4,620 Louisiana Public Facilities Authority,
(Eden Point), 6.25%, 3/1/34 4,111,939
4,000 Muni Mae Tax-Exempt Bond, LLC, (AMT),
Variable Rate, 6/30/09 4,022,120
3,430 North Little Rock, AR, Residential
Housing Facilities, (Parkstone Place),
6.50%, 8/1/21 3,263,473
3,700 Oregon Health Authority, (Trillium
Affordable Housing), (AMT),
6.75%, 2/15/29 3,478,962
1,000 Raleigh, NC, Housing Authority,
Multifamily, (Cedar Point),
7.00%, 11/1/30 777,720
-------------------------------------------------------------------------
$ 21,621,717
-------------------------------------------------------------------------
Industrial Development Revenue -- 9.4%
-------------------------------------------------------------------------
$ 1,990 Abia Development Corp., TX, (Austin
Cargoport Development), (AMT),
6.50%, 10/1/24 $ 1,785,050
1,970 Broward County, FL, IDR, (Lynxs
Cargoport), (AMT), 6.75%, 6/1/19 1,816,241
4,000 Courtland, AL, Solid Waste Disposal,
(Champion International Corp.), (AMT),
6.70%, 11/1/29 4,202,920
2,500 Denver, CO, City and County, (United
Airlines), Variable Rate, 10/1/32(1)(3) 2,389,400
1,000 Gloucester County, NJ, Improvements
Authority, (Waste Management, Inc.),
(AMT), 7.00%, 12/1/29 1,092,250
2,500 Gulf Coast, TX, Waste Disposal
Authority, (Valero Energy Corp.) (AMT),
5.70%, 4/1/32 2,222,800
3,425 Middleboro, MA, (Read Corp.),
9.50%, 10/1/10 3,505,796
3,550 Mississippi Business Finance Corp.,
(System Energy Resources, Inc.),
5.90%, 5/1/22 3,288,969
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Industrial Development Revenue (continued)
-------------------------------------------------------------------------
$ 3,000 Missouri Development Finance Authority,
Solid Waste Disposal, (Proctor and
Gamble Paper Products), (AMT),
5.20%, 3/15/29 $ 2,919,390
3,000 New Jersey EDA, (Continental Airlines),
(AMT), Variable Rate, 3/15/23(1)(3) 2,604,900
5,750 Ohio Solid Waste Disposal, (USG Corp.),
(AMT), 5.65%, 3/1/33 2,767,303
3,550 Phoenix, AZ, IDA, (America West
Airlines, Inc.), (AMT), 6.25%, 6/1/19 2,942,134
-------------------------------------------------------------------------
$ 31,537,153
-------------------------------------------------------------------------
Insured - Education -- 0.8%
-------------------------------------------------------------------------
$ 3,000 Massachusetts HEFA, (Berklee College of
Music), (MBIA), Variable Rate,
10/1/27(1)(3) $ 2,772,630
-------------------------------------------------------------------------
$ 2,772,630
-------------------------------------------------------------------------
Insured - Electric Utilities -- 2.8%
-------------------------------------------------------------------------
$ 6,250 Brazos River Authority, TX, PCR, (Texas
Utilities Electric Co.), (MBIA), (AMT),
5.55%, 6/1/30 $ 6,264,625
3,000 Burke County, GA, Development Authority,
(Georgia Power Co.), (MBIA), (AMT),
5.45%, 5/1/34 2,996,640
-------------------------------------------------------------------------
$ 9,261,265
-------------------------------------------------------------------------
Insured - General Obligations -- 3.6%
-------------------------------------------------------------------------
$11,250 Chicago, IL, (MBIA), 5.00%, 1/1/41 $ 10,304,100
1,725 Lancaster County, SC, School District,
(FSA), 4.75%, 3/1/18 1,637,836
-------------------------------------------------------------------------
$ 11,941,936
-------------------------------------------------------------------------
Insured - Hospital -- 2.7%
-------------------------------------------------------------------------
$10,000 New York Dormitory Authority, (Municipal
Health Facilities Improvement), (FSA),
4.75%, 1/15/29 $ 9,038,800
-------------------------------------------------------------------------
$ 9,038,800
-------------------------------------------------------------------------
Insured - Transportation -- 10.8%
-------------------------------------------------------------------------
$ 3,500 Chicago, IL, O'Hare International
Airport, (AMBAC), (AMT),
5.375%, 1/1/32(5) $ 3,412,675
2,850 Clark County, NV, Airport, (MBIA),
6.00%, 7/1/29 3,042,005
4,930 Dallas-Fort Worth, TX, International
Airport, (FGIC), (AMT), 5.75%, 11/1/30 5,020,219
4,500 Dallas-Fort Worth, TX, International
Airport, (FGIC), (AMT), 6.125%, 11/1/35 4,719,645
SEE NOTES TO FINANCIAL STATEMENTS
5
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Insured - Transportation (continued)
-------------------------------------------------------------------------
$ 3,500 Florida Turnpike Authority, (Department
of Transportation), (FGIC),
4.50%, 7/1/27 $ 3,066,280
4,250 Metropolitan Transportation Authority,
NY, Commuter Revenue (FGIC),
4.75%, 7/1/26 3,958,195
7,500 Minneapolis and St. Paul, MN,
Metropolitan Airport Commission, (FGIC),
5.25%, 1/1/32 7,359,675
5,500 Nevada Department of Business and
Industry, (Las Vegas Monorail - 1st
Tier), (AMBAC), 5.375%, 1/1/40 5,377,240
-------------------------------------------------------------------------
$ 35,955,934
-------------------------------------------------------------------------
Insured - Water and Sewer -- 1.3%
-------------------------------------------------------------------------
$ 5,000 Charleston, SC, Waterworks and Sewer,
(FGIC), 4.50%, 1/1/24 $ 4,384,050
-------------------------------------------------------------------------
$ 4,384,050
-------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 2.4%
-------------------------------------------------------------------------
$ 8,500 Michigan Building Authority,
4.75%, 10/15/21 $ 7,842,610
-------------------------------------------------------------------------
$ 7,842,610
-------------------------------------------------------------------------
Miscellaneous -- 1.0%
-------------------------------------------------------------------------
$ 3,300 Santa Fe, NM, (Crow Hobbs),
8.50%, 9/1/16 $ 3,454,374
-------------------------------------------------------------------------
$ 3,454,374
-------------------------------------------------------------------------
Nursing Home -- 1.5%
-------------------------------------------------------------------------
$ 2,000 Orange County, FL, Health Facilities
Authority, (Westminster Community Care),
6.75%, 4/1/34 $ 1,776,840
2,000 Tarrant County, TX, Health Facilities
Authority, (3927 Foundation),
10.25%, 9/1/19(6) 598,440
3,000 Wisconsin HEFA, (Wisconsin Illinois
Senior Housing), 7.00%, 8/1/29 2,783,550
-------------------------------------------------------------------------
$ 5,158,830
-------------------------------------------------------------------------
Pooled Loans -- 0.9%
-------------------------------------------------------------------------
$ 667 Tax Exempt Securities Trust, Community
Health Provider, Pooled Loan Program,
6.00%, 12/1/36 $ 613,624
1,760 Tax Exempt Securities Trust, Community
Health Provider, Pooled Loan Program,
6.25%, 12/1/36 1,688,731
668 Tax Exempt Securities Trust, Community
Health Provider, Pooled Loan Program,
7.75%, 12/1/36 647,245
-------------------------------------------------------------------------
$ 2,949,600
-------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Senior Living / Life Care -- 3.2%
-------------------------------------------------------------------------
$ 430 Delaware County, PA, IDA, (Glen Riddle),
(AMT), 8.125%, 9/1/05 $ 446,091
2,000 Delaware County, PA, IDA, (Glen Riddle),
(AMT), 8.625%, 9/1/25 2,136,560
3,245 Logan County, CO, Industrial Development
Revenue, (TLC Care Choices, Inc.),
6.875%, 12/1/23 2,891,425
1,400 Mesquite, TX, Health Facilities
Authority, (Christian Retirement
Facility), 7.625%, 2/15/28 1,404,508
3,700 Ohio HFA, Retirement Rental Housing,
(Encore Retirement Partners),
6.75%, 3/1/19 3,144,260
750 Okaloosa County, FL, Retirement Rental
Housing, (Encore Retirement Partners),
6.125%, 2/1/14 638,933
-------------------------------------------------------------------------
$ 10,661,777
-------------------------------------------------------------------------
Special Tax Revenue -- 4.3%
-------------------------------------------------------------------------
$ 3,600 Black Hawk, CO, Business Improvement
District, 6.50%, 12/1/11 $ 3,514,608
1,500 Longleaf, FL, Community Development
District, 6.20%, 5/1/09 1,450,380
1,910 Longleaf, FL, Community Development
District, 6.65%, 5/1/20 1,841,297
6,500 Puerto Rico Infrastructure Financing
Authority, Variable Rate, 10/1/32(1)(2) 7,171,385
60 South Orange County, CA, Public
Financing Authority, DRIVERS, Variable
Rate, 8/15/15(1)(3) 379,740
-------------------------------------------------------------------------
$ 14,357,410
-------------------------------------------------------------------------
Transportation -- 2.8%
-------------------------------------------------------------------------
$ 8,000 Kent County, MI, Airport Facility,
5.00%, 1/1/25 $ 7,634,160
2,400 Massachusetts Turnpike Authority,
Metropolitan Highway System, Variable
Rate, 1/1/37(1)(2) 1,793,088
-------------------------------------------------------------------------
$ 9,427,248
-------------------------------------------------------------------------
Utilities - Electrical and Gas -- 2.3%
-------------------------------------------------------------------------
$ 8,500 San Antonio, TX, Electric and Natural
Gas, 4.50%, 2/1/21 $ 7,527,685
-------------------------------------------------------------------------
$ 7,527,685
-------------------------------------------------------------------------
Water and Sewer -- 3.1%
-------------------------------------------------------------------------
$ 100 Los Angeles, CA, Department of Water and
Power, Variable Rate, 2/15/30(1)(3) $ 494,750
1,500 Metropolitan Water District, CA,
(Southern California Waterworks),
Variable Rate, 7/1/27(1)(3) 1,178,550
SEE NOTES TO FINANCIAL STATEMENTS
6
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Water and Sewer (continued)
-------------------------------------------------------------------------
$ 2,000 New York, NY, City Municipal Water
Finance Authority (Water and Sewer
Systems Revenue), 5.50%, 6/15/33 $ 2,028,440
6,500 Sacramento County, CA, Sanitation
District Financing Authority Revenue,
5.875%, 12/1/27 6,731,725
-------------------------------------------------------------------------
$ 10,433,465
-------------------------------------------------------------------------
Total Tax-Exempt Investments -- 99.0%
(identified cost $341,338,691) $330,538,775
-------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.0% $ 3,401,812
-------------------------------------------------------------------------
Net Assets -- 100.0% $333,940,587
-------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
At May 31, 2001, the concentration of the Trust's investments in the various
states, determined as a percentage of net assets, is as follows:
Texas 13.2%
Others, representing less than 10% individually 85.8%
The Trust invests primarily in debt securities issued by municipalities. The
ability of the issuers of the debt securities to meet their obligations may
be affected by economic developments in a specific industry or municipality.
In order to reduce the risk associated with such economic developments, at
May 31, 2001, 22.2% of the securities in the portfolio of investments are
backed by bond insurance of various financial institutions and financial
guaranty assurance agencies. The aggregate percentage insured by financial
institutions ranged from 2.7% to 8.6% of total investments.
(1) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(2) Security has been issued as a leveraged inverse floater bond.
(3) Security has been issued as an inverse floater bond.
(4) Security (or a portion thereof) has been segregated to cover when-
issued securities.
(5) When-issued security.
(6) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
7
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
AS OF MAY 31, 2001
Assets
------------------------------------------------------
Investments, at value
(identified cost, $341,338,691) $330,538,775
Cash 913,597
Receivable for investments sold 70,000
Interest receivable 5,844,010
Prepaid expenses 41,509
------------------------------------------------------
TOTAL ASSETS $337,407,891
------------------------------------------------------
Liabilities
------------------------------------------------------
Payable to affiliate for Trustees' fees $ 1,585
Payable for when-issued securities 3,375,400
Accrued expenses 90,319
------------------------------------------------------
TOTAL LIABILITIES $ 3,467,304
------------------------------------------------------
NET ASSETS $333,940,587
------------------------------------------------------
Sources of Net Assets
------------------------------------------------------
Auction Preferred Shares, $0.01 par
value; unlimited number of shares
authorized, 5,240 shares issued and
outstanding at $25,000 per share
liquidation preference $131,000,000
Common Shares, $0.01 par value;
unlimited number of shares
authorized, 16,341,127 shares issued
and outstanding 163,411
Additional paid-in capital 242,373,930
Accumulated net realized loss (computed
on the basis of identified cost) (30,101,083)
Accumulated undistributed net investment
income 1,304,245
Net unrealized depreciation (computed on
the basis of identified cost) (10,799,916)
------------------------------------------------------
NET ASSETS $333,940,587
------------------------------------------------------
Net assets applicable to preferred
shares --
Auction Preferred Shares at
liquidation value $131,000,000
Cumulative undeclared dividends 10,938
------------------------------------------------------
NET ASSETS APPLICABLE TO PREFERRED
SHARES $131,010,938
------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $202,929,649
------------------------------------------------------
TOTAL NET ASSETS $333,940,587
------------------------------------------------------
Net Asset Value Per Common Share
------------------------------------------------------
($202,929,649 DIVIDED BY 16,341,127
COMMON SHARES ISSUED AND OUTSTANDING) $ 12.42
------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
MAY 31, 2001
Investment Income
-----------------------------------------------------
Interest $10,870,381
-----------------------------------------------------
TOTAL INVESTMENT INCOME $10,870,381
-----------------------------------------------------
Expenses
-----------------------------------------------------
Investment adviser fee $ 1,176,788
Administration fee 336,225
Trustees' fees and expenses 7,188
Preferred shares remarketing agent fee 163,301
Transfer and dividend disbursing agent
fees 90,956
Custodian fee 85,454
Legal and accounting services 26,177
Printing and postage 23,528
Miscellaneous 33,770
-----------------------------------------------------
TOTAL EXPENSES $ 1,943,387
-----------------------------------------------------
Deduct --
Reduction of custodian fee $ 9,396
-----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 9,396
-----------------------------------------------------
NET EXPENSES $ 1,933,991
-----------------------------------------------------
NET INVESTMENT INCOME $ 8,936,390
-----------------------------------------------------
Realized and Unrealized Gain (Loss)
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(3,984,188)
Financial futures contracts (97,466)
Interest rate swap contracts (525,600)
-----------------------------------------------------
NET REALIZED LOSS $(4,607,254)
-----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $11,558,270
Financial futures contracts 78,675
Interest rate swap contracts 43,800
-----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $11,680,745
-----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 7,073,491
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $16,009,881
-----------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
8
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
INCREASE (DECREASE) MAY 31, 2001 YEAR ENDED
IN NET ASSETS (UNAUDITED) NOVEMBER 30, 2000
-----------------------------------------------------------------------------
From operations --
Net investment income $ 8,936,390 $ 17,621,668
Net realized loss (4,607,254) (14,544,619)
Net change in unrealized
appreciation (depreciation) 11,680,745 18,789,011
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 16,009,881 $ 21,866,060
-----------------------------------------------------------------------------
Distributions to shareholders --
Preferred Shareholders --
From net investment income $ (2,391,929) $ (5,330,835)
Common Shareholders --
From net investment income (6,073,185) (12,771,225)
-----------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (8,465,114) $ (18,102,060)
-----------------------------------------------------------------------------
Capital share transactions --
Reinvestment of distributions
to shareholders $ 705,037 $ 672,063
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS $ 705,037 $ 672,063
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 8,249,804 $ 4,436,063
-----------------------------------------------------------------------------
Net Assets
-----------------------------------------------------------------------------
At beginning of period $ 325,690,783 $ 321,254,720
-----------------------------------------------------------------------------
AT END OF PERIOD $ 333,940,587 $ 325,690,783
-----------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
-----------------------------------------------------------------------------
AT END OF PERIOD $ 1,304,245 $ 832,969
-----------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
9
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING PERIODS STATED
SIX MONTHS ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 2001 ---------------------------------
(UNAUDITED)(1) 2000(1) 1999(1)(2)
---------------------------------------------------------------------------------------
Net asset value -- Beginning
of period (Common shares) $11.950 $11.720 $15.000
---------------------------------------------------------------------------------------
Income (loss) from operations
---------------------------------------------------------------------------------------
Net investment income $ 0.548 $ 1.083 $ 0.837
Net realized and unrealized
gain (loss) 0.442 0.260 (3.246)
---------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.990 $ 1.343 $(2.409)
---------------------------------------------------------------------------------------
Less distributions
---------------------------------------------------------------------------------------
Preferred Shareholders --
From net investment income $(0.147) $(0.328) $(0.197)
Common Shareholders --
From net investment income $(0.373) $(0.785) $(0.550)
---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.520) $(1.113) $(0.747)
---------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES
OFFERING COSTS CHARGED TO
PAID-IN CAPITAL $ -- $ -- $(0.042)
---------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING
DISCOUNTS $ -- $ -- $(0.082)
---------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD (COMMON SHARES) $12.420 $11.950 $11.720
---------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD
(COMMON SHARES) $12.470 $11.125 $11.688
---------------------------------------------------------------------------------------
TOTAL RETURN(3) 15.50% 2.05% (18.74)%
---------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
10
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING PERIODS STATED
SIX MONTHS ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 2001 ---------------------------------
(UNAUDITED)(1) 2000(1) 1999(1)(2)
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data+ ++
---------------------------------------------------------------------------------------------
Net assets, end of period
(000's omitted) $333,941 $325,691 $321,255
Ratios (As a percentage of
average net assets
attributable to common
shares):
Net expenses(4) 1.91%(5) 1.95% 1.76%(5)
Net expenses after
custodian fee
reduction(4) 1.90%(5) 1.91% 1.70%(5)
Net investment income(4) 8.78%(5) 9.47% 7.38%(5)
Portfolio Turnover 38% 66% 151%
+ The expenses of the may Trust may reflect a reduction of the investment adviser fee. Had
such action not been taken, the ratios and the net investment income per share would have
been as follows:
Ratios (As a percentage of
average net assets
attributable to common
shares):
Expenses 1.76%(5)
Expenses after custodian
fee reduction 1.70%(5)
Net investment income 7.38%(5)
Net investment income per
share $ 0.837
---------------------------------------------------------------------------------------------
++ The ratios reported above are based on net assets attributable solely to common shares.
The ratios based on the net assets, including amounts related to preferred shares, are
as follows:
Ratios (As a percentage of
average total net assets):
Net expenses(4) 1.17%(5) 1.15% 1.14%(5)
Net expenses after
custodian fee
reduction(4) 1.16%(5) 1.12% 1.10%(5)
Net investment income(4) 5.35%(5) 5.56% 4.77%(5)
+ The expenses of the Trust may reflect a reduction of the investment adviser fee. Had such
action not been taken, the ratios would have been as follows:
Ratios (As a percentage of
average total net assets):
Expenses 1.14%(5)
Expenses after custodian
fee reduction 1.10%(5)
Net investment income 4.77%(5)
---------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares
outstanding 5,240 5,240 5,240
Asset coverage per
preferred share $ 63,729 $ 62,155 $ 61,308
Involuntary liquidation
preference per preferred
share $ 25,000 $ 25,000 $ 25,000
Approximate market value
per preferred share $ 25,000 $ 25,000 $ 25,000
---------------------------------------------------------------------------------------------
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, January 29, 1999, to November
30, 1999.
(3) Total return is calculated assuming a purchase at the current market
price on the first day and a sale at the current market price on the
last day of each period reported. Dividends and distributions, if any,
are assumed reinvested at the net asset value on the reinvestment date.
Total return is not computed on an annualized basis.
(4) Ratios do not reflect the effect of dividend payments to preferred
shareholders. Ratios to average net assets attributable to common shares
reflect the Trust's leveraged capital structure.
(5) Annualized.
(6) Calculated by subtracting the Trust's total liabilities (not including
the preferred shares) from the Trust's total asset, and dividing this by
the number of preferred shares outstanding.
(7) Plus accumulated and unpaid dividends.
SEE NOTES TO FINANCIAL STATEMENTS
11
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
-------------------------------------------
Eaton Vance Municipal Income Trust (the Trust) is an entity commonly known as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940 as a non-diversified, closed-end management investment company.
The Trust was organized under the laws of the Commonwealth of Massachusetts
by an Agreement and Declaration of Trust dated December 10, 1998. The Trust's
investment objective is to achieve current income exempt from regular federal
income tax by investing primarily in investment grade municipal obligations.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuation -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest bid and asked prices. Futures contracts listed on the
commodity exchanges are valued at closing settlement prices. Short-term
obligations, maturing in sixty days or less, are valued at amortized cost,
which approximates value. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Investment Transactions -- Investment transactions are recorded on a trade
date basis. Realized gains and losses from such transactions are determined
using the specific identification method. Securities purchased or sold on a
when-issued or delayed delivery basis may be settled a month or more after
the transaction date. The securities so purchased are subject to market
fluctuations during this period. To the extent that when-issued or delayed
delivery purchases are outstanding, the Trust instructs the custodian to
segregate assets in a separate account, with a current value at least equal
to the amount of its purchase commitments.
C Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount on long-term debt securities
when required for federal income tax purposes. The Trust will adopt the
provision of the AICPA Audit and Accounting Guide for Investment Companies,
as revised, effective for fiscal years beginning after December 15, 2000. As
required, the Trust will begin accreting market discounts on debt securities
effective December 1, 2001. Prior to this date, the Trust did not accrete
market discounts on debt securities. The cumulative effect of this accounting
change will have no impact on the total net assets of the Trust. The impact
of this accounting change has not been determined but will result in an
increase to cost of securities and a corresponding increase in net unrealized
depreciation based on securities held as of May 31, 2001.
D Federal Income Taxes -- The Trust's policy is to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders each year all of its taxable, if any, and
tax-exempt income, including any net realized gain on investments. Therefore,
no provision for federal income or excise tax is necessary. At November 30,
2000, the Trust, for federal income tax purposes, had a capital loss
carryover of $25,572,504 which will reduce the taxable income arising from
future net realized gain on investments, 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 Trust of any
liability for federal income or excise tax. Such capital loss carryover will
expire on November 30, 2007 ($10,949,210) and November 30, 2008
($14,623,294). In addition, the Trust intends to satisfy conditions which
will enable it to designate distributions from the interest income generated
by its investments in municipal obligations, which are exempt from regular
federal income taxes when received by the Trust, 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
for investors.
E Organization and Offering Costs -- Costs incurred by the Trust in connection
with its organization have been expensed. Costs incurred by the Trust in
connection with the offerings of the common shares and preferred shares were
recorded as a reduction of capital paid in excess of par applicable to common
shares.
F Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Trust is required to deposit (initial margin) either in cash or
securities an amount equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Trust (margin maintenance) each day, dependent on the daily
fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Trust. The Trust's
investment in financial futures contracts is designed for both hedging
against
12
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
anticipated future changes in interest rates and investment purposes. Should
interest rates move unexpectedly, the Trust may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss.
G Options on Financial Futures Contracts -- Upon the purchase of a put option
on a financial futures contract by the Trust, the premium paid is recorded as
an investment, the value of which is marked-to-market daily. When a purchased
option expires, the Trust will realize a loss in the amount of the cost of
the option. When the Trust enters into a closing sale transaction, the Trust
will realize a gain or loss depending on whether the sales proceeds from the
closing sale transaction are greater or less than the cost of the option.
When the Trust exercises a put option, settlement is made in cash. The risk
associated with purchasing put options is limited to the premium originally
paid.
H Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the
reporting period. Actual results could differ from those estimates.
I Interest Rate Swaps -- The Trust has entered into interest rate swap
agreements to enhance return, to hedge against fluctuations in securities
prices or interest rates or as substitution for the purchase or sale of
securities. Pursuant to these agreements the Trust makes monthly payments at
a rate equal to a predetermined spread to the one-month LIBOR. In exchange,
the Trust receives payments based on the rate of return of a benchmark
industry index. During the term of the outstanding swap agreement, changes in
the underlying value of the swap are recorded as unrealized gains and losses.
Payments received or made at end of measurement period are recorded as
realized gains and losses. The value of the swap is determined by changes in
the relationship between two rates of interest. The Trust is exposed to
credit loss in the event of non-performance by the swap counterparty.
However, the Trust does not anticipate non-performance by the counterparty.
Risk may also arise from the unanticipated movements in value of interest
rates.
J Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Trust. Pursuant to the custodian agreement, IBT receives a fee reduced
by credits which are determined based on the average daily cash balance the
Trust maintains with IBT. All significant credit balances used to reduce the
Trust's custodian fees are reported as a reduction of total expenses in the
Statement of Operations.
K Interim Financial Statements -- The interim financial statements relating to
May 31, 2001 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Trust's
management reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
2 Auction Preferred Shares (APS)
-------------------------------------------
The Trust issued 2,620 shares of Auction Preferred Shares Series A and 2,620
shares of Auction Preferred Shares Series B on March 1, 1999 in a public
offering. The underwriting discount and other offering costs were recorded as
a reduction of the capital of the common shares. Dividends on the APS, which
accrue daily, are cumulative at a rate which was established at the offering
of the APS and have been reset every 7 days thereafter by an auction.
Dividend rates ranged from 3.00% to 5.19% and from 2.90% to 4.80% for
Series A and Series B Shares respectively, during the six months ended
May 31, 2001. Series A and Series B are identical in all respects except for
the dates of reset for the dividend rates.
The APS are redeemable at the option of the Trust, at a redemption price
equal to $25,000 per share, plus accumulated and unpaid dividends on any
dividend payment date. The APS are also subject to mandatory redemption at a
redemption price equal to $25,000 per share, plus accumulated and unpaid
dividends, if the Trust is in default on its asset maintenance requirements
with respect to the APS. If the dividends on the APS shall remain unpaid in
an amount equal to two full years' dividends, the holders of the APS as a
class have the right to elect a majority of the Board of Trustees. In
general, the holders of the APS and the common shares have equal voting
rights of one vote per share, except that the holders of the APS, as a
separate class, have the right to elect at least two members of the Board of
Trustees. The APS have a liquidation preference of $25,000 per share, plus
accumulated and unpaid dividends. The Trust is required to maintain certain
asset coverage with respect to the APS as defined in the Trust's By-Laws. The
Trust pays annual fees equivalent to 0.25% of the preferred shares'
liquidation value for the remarketing efforts associated with the preferred
auctions.
13
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
3 Distributions to Shareholders
-------------------------------------------
The Trust intends to make monthly distributions of net investment income,
after payment of any dividends on any outstanding preferred shares.
Distributions are recorded on the ex-dividend date. Distributions to
preferred shareholders are recorded daily and are payable at the end of each
dividend period. Each dividend payment period for the Auction Preferred
Shares is generally seven days. The applicable dividend rate for the Auction
Preferred Shares on May 31, 2001 was 3.05% and 2.90%, for Series A and
Series B Shares, respectively. For the six months ended May 31, 2001, the
Trust paid dividends to Auction Preferred shareholders amounting to
$1,207,610 and $1,184,319 for Series A and Series B Shares, respectively,
representing an average APS dividend rate for such period of 3.67% and 3.63%,
respectively.
4 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
The investment adviser fee, computed at an annual rate of 0.70% of the
Trust's average weekly gross assets, was earned by Eaton Vance Management
(EVM) as compensation for management and investment advisory services
rendered to the Trust. Except for Trustees of the Trust who are not members
of EVM's organization, officers and Trustees receive remuneration for their
services to the Trust out of such investment adviser fee. For the six months
ended May 31, 2001, the fee was equivalent to 0.70% of the Trust's average
weekly gross assets and amounted to $1,176,788. EVM also serves as the
administrator of the Trust. An administration fee, computed at the annual
rate of 0.20% of the average weekly gross assets of the Trust is paid to EVM
for managing and administering business affairs of the Trust. For the six
months ended May 31, 2001, the administrative fee amounted to $336,225.
Trustees of the Trust that 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
six months ended May 31, 2001, no significant amounts have been deferred.
Certain officers and Trustees of the Trust are officers of EVM.
5 Investments
-------------------------------------------
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $125,823,567 and $124,684,520,
respectively, for the six months ended May 31, 2001.
6 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by the Trust at May 31, 2001, as computed for Federal
income tax purposes, are as follows:
AGGREGATE COST $341,338,691
------------------------------------------------------
Gross unrealized appreciation $ 7,063,147
Gross unrealized depreciation (17,863,063)
------------------------------------------------------
NET UNREALIZED DEPRECIATION $(10,799,916)
------------------------------------------------------
7 Shares of Beneficial Interest
-------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional $0.01 par value common shares. Transactions in common
shares were as follows:
SIX MONTHS ENDED
MAY 31, 2001 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 2000
-----------------------------------------------------------------------------
Shares issued pursuant to the Trust's
dividend reinvestment plan 56,166 61,394
-----------------------------------------------------------------------------
NET INCREASE 56,166 61,394
-----------------------------------------------------------------------------
8 Financial Instruments
-------------------------------------------
The Trust regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include 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 Trust
has in particular classes of financial instruments and does 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.
14
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
The Trust did not have any open obligations under these financial instruments
at May 31, 2001.
9 Annual Meeting of Shareholders (Unaudited)
-------------------------------------------
The Trust held its Annual Meeting of Shareholders on March 23, 2001. The
following actions were taken by the shareholders:
ITEM 1: The election of James B. Hawkes and Samual L. Hayes, III as Trustees
of the Trust, for a three-year term expiring in 2004. Mr. Hayes was
designated the Nominee to be elected soley by APS shareholders:
NUMBER OF SHARES
NOMINEE FOR TRUSTEE ---------------------
ELECTED BY APS SHAREHOLDERS FOR WITHHELD
---------------------------------------------------------------
Samuel L. Hayes, III 5,230 5
NUMBER OF SHARES
NOMINEE FOR TRUSTEE ---------------------
ELECTED BY ALL SHAREHOLDERS FOR WITHHELD
---------------------------------------------------------------
James B. Hawkes 15,868,291 232,431
Also serving as Trustees are Jessica M. Bibliowicz, Donald R. Dwight,
Norton H. Reamer, Lynn A. Stout and Jack L. Treynor.
ITEM 2: The ratification of the selection of Deloitte & Touche LLP as
independent certified public accountants to the Trust for the fiscal year
ending November 30, 2001.
NUMBER OF SHARES
----------------------------------------------------------
For 15,809,474
Against 70,900
Abstain 197,753
15
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the Plan) pursuant to which
shareholders automatically have dividends and capital gains distributions
reinvested in common shares (the Shares) of the Trust unless they elect
otherwise through their investment dealer. On the distribution payment date, if
the net asset value per Share is equal to or less than the market price per
Share plus estimated brokerage commissions then new Shares will be issued. The
number of Shares shall be determined by the greater of the net asset value per
Share or 95% of the market price. Otherwise, Shares generally will be purchased
on the open market by the Plan Agent. Distributions subject to income tax (if
any) are taxable whether or not shares are reinvested.
If your shares are in the name of a brokerage firm, bank, or other nominee, you
can ask the firm or nominee to participate in the Plan on your behalf. If the
nominee does not offer the Plan, you will need to request that your shares be
re-registered in your name with the Trust's transfer agent, PFPC, Inc. or you
will not be able to participate.
The Plan Agent's service fee for handling distributions will be paid by the
Trust. Each participant will be charged their pro rata share of brokerage
commissions on all open-market purchases.
Plan participants may withdraw from the Plan at any time by writing to the Plan
Agent at the address noted on the following page. If you withdraw, you will
receive shares in your name for all Shares credited to your account under the
Plan. If a participant elects by written notice to the Plan Agent to have the
Plan Agent sell part or all of his or her Shares and remit the proceeds, the
Plan Agent is authorized to deduct a $5.00 fee plus brokerage commissions from
the proceeds.
If you wish to participate in the Plan and your shares are held in your own
name, you may complete the form on the following page and deliver it to the Plan
Agent.
Any inquires regarding the Plan can be directed to the Plan Agent, PFPC, Inc.
16
APPLICATION FOR PARTICIPATION IN DIVIDEND REINVESTMENT PLAN
This form is for shareholders who hold their common shares in their own names.
If your common shares are held in the name of a brokerage firm, bank, or other
nominee, you should contact your nominee to see if it will participate in the
Plan on your behalf. If you wish to participate in the Plan, but your brokerage
firm, bank, or nominee is unable to participate on your behalf, you should
request that your common shares be re-registered in your own name which will
enable your participation in the Plan.
The following authorization and appointment is given with the understanding that
I may terminate it at any time by terminating my participation in the Plan as
provided in the terms and conditions of the Plan.
------------------------------------------------------
Please print exact name on account:
------------------------------------------------------
Shareholder signature Date
------------------------------------------------------
Shareholder signature Date
Please sign exactly as your common shares are registered.
All persons whose names appear on the share certificate
must sign.
YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO RECEIVE YOUR DIVIDENDS AND
DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.
THIS AUTHORIZATION FORM, WHEN SIGNED, SHOULD BE MAILED TO THE FOLLOWING ADDRESS:
Eaton Vance Municipal Income Trust
c/o PFPC, Inc.
P.O. Box 8030
Boston, MA 02266-8030
800-331-1710
--------------------------------------------------------------------------------
NUMBER OF EMPLOYEES
The Trust is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a closed-end,
non-diversified, management investment company and has no employees.
NUMBER OF SHAREHOLDERS
As of May 31, 2001, our records indicate that there are 196 registered
shareholders and approximately 7,250 shareholders owning the Trust shares in
street name, such as through brokers, banks, and financial intermediaries.
If you are a street name shareholder and wish to receive our reports directly,
which contain important information about the Trust, please write or call:
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
NEW YORK STOCK EXCHANGE SYMBOL
The New York Stock Exchange symbol is EVN.
17
EATON VANCE MUNICIPAL INCOME TRUST AS OF MAY 31, 2001
INVESTMENT MANAGEMENT
EATON VANCE MUNICIPAL INCOME TRUST
Officers
Thomas J. Fetter
President
James B. Hawkes
Vice President and Trustee
Robert B. MacIntosh
Vice President
Thomas M. Metzold
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Operating Officer,
Hellman, Jordan Management Co., Inc.
President, Jordan Simmons Capital LLC
and Unicorn Corporation
Lynn A. Stout
Professor of Law,
University of California at Los Angeles
Jack L. Treynor
Investment Adviser and Consultant
18
INVESTMENT ADVISER AND ADMINISTRATOR OF
EATON VANCE MUNICIPAL INCOME TRUST
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PFPC, INC.
Attn: Eaton Vance Municipal Income Trust
P.O. Box 8030
Boston, MA 02266-8030
(800) 331-1710
EATON VANCE FUNDS
EATON VANCE MANAGEMENT
BOSTON MANAGEMENT AND RESEARCH
EATON VANCE DISTRIBUTORS, INC.
PRIVACY NOTICE
The Eaton Vance organization is committed to ensuring your financial privacy.
This notice is being sent to comply with privacy regulations of the Securities
and Exchange Commission. Each of the above financial institutions has in effect
the following 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.
- 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).
- Policies and procedures (including physical, electronic and procedural
safeguards) are in place that are designed to protect the confidentiality
of such information.
For more information about Eaton Vance's privacy policies, call: 1-800-262-1122
EATON VANCE MUNICIPAL INCOME TRUST
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
151-7/01 CE-NASRC