Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Municipal Bond Fund II (Municipal Fund II),
Eaton Vance California Municipal Bond Fund II (California Fund II), Eaton Vance Massachusetts Municipal Bond Fund (Massachusetts Fund), Eaton Vance Michigan Municipal Bond Fund (Michigan Fund), Eaton Vance New Jersey Municipal Bond Fund (New Jersey
Fund), Eaton Vance New York Municipal Bond Fund II (New York Fund II), Eaton Vance Ohio Municipal Bond Fund (Ohio Fund) and Eaton Vance Pennsylvania Municipal Bond Fund (Pennsylvania Fund), (each individually referred to as the Fund, and
collectively, the Funds), are Massachusetts business trusts registered under the Investment Company Act of 1940, as amended (the 1940 Act), as non-diversified, closed-end management investment companies, except for Municipal Fund II, which is a
diversified, closed-end management investment company. The Funds investment objective is to provide current income exempt from regular federal income tax, including alternative minimum tax, and, in state specific funds, taxes in its specified
state.
The following is a summary of significant accounting policies of the Funds. The policies are in conformity with accounting principles generally
accepted in the United States of America.
A Investment Valuation
Debt obligations (including short-term obligations with a remaining maturity of more than sixty days) are generally valued on the basis of valuations provided by third party pricing services, as
derived from such services pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics,
benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the
valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. Financial futures contracts are valued at the closing settlement
price established by the board of trade or exchange on which they are traded. Interest rate swaps are normally valued using valuations provided by a third party pricing service. Such pricing service valuations are based on the present value of fixed
and projected floating rate cash flows over the term of the swap contract. Future cash flows are discounted to their present value using swap rates provided by electronic data services or by broker/dealers. 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.
At September 30, 2012, the following Funds, for federal income tax purposes, had capital loss carryforwards and 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 are treated as realized prior to the
utilization of the capital loss carryforward. The amounts and expiration dates of the capital loss carryforwards and the amounts of the deferred capital losses are as follows:
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Expiration Date
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Municipal
Fund II
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California
Fund II
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Massachusetts
Fund
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Michigan
Fund
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September 30, 2013
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$
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$
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|
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$
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179,329
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|
|
$
|
384,407
|
|
September 30, 2016
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|
658,427
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|
|
|
52,500
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|
|
|
|
|
|
|
1,883
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|
September 30, 2017
|
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|
2,011,041
|
|
|
|
1,365,711
|
|
|
|
94,578
|
|
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|
September 30, 2018
|
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|
11,539,291
|
|
|
|
3,330,399
|
|
|
|
1,054,999
|
|
|
|
579,696
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September 30, 2019
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1,277,303
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|
1,539,887
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|
|
|
225,669
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|
515,704
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Total capital loss carryforward
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$
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15,486,062
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|
$
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6,288,497
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$
|
1,554,575
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$
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1,481,690
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Deferred capital losses
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$
|
7,301,218
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$
|
4,990,165
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$
|
1,439,462
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|
|
$
|
573,761
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Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
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Expiration Date
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New Jersey
Fund
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New York
Fund II
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Ohio
Fund
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Pennsylvania
Fund
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September 30, 2013
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$
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$
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|
$
|
321,978
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|
$
|
|
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September 30, 2016
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|
|
|
|
41,818
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|
|
|
83,319
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|
|
|
|
|
September 30, 2017
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|
244,927
|
|
|
|
1,233,356
|
|
|
|
1,620,085
|
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|
September 30, 2018
|
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|
2,060,337
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|
|
1,545,637
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|
|
|
3,381,936
|
|
|
|
1,949,047
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September 30, 2019
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|
1,369,694
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|
|
1,548,104
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|
669,118
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|
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925,899
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Total capital loss carryforward
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$
|
3,674,958
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|
|
$
|
4,368,915
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|
$
|
6,076,436
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$
|
2,874,946
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Deferred capital losses
|
|
$
|
2,266,743
|
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|
$
|
1,493,090
|
|
|
$
|
1,081,868
|
|
|
$
|
2,071,926
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As of March 31, 2013, the Funds had no uncertain tax positions that would require financial statement recognition,
de-recognition, or disclosure. Each Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expense Reduction
State
Street Bank and Trust Company (SSBT) serves as custodian of the Funds. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance each Fund maintains with SSBT. All
credit balances, if any, used to reduce each Funds custodian fees are reported as a reduction of expenses in the Statements of Operations.
E Legal Fees
Legal fees and other related expenses incurred as part of negotiations of the terms and requirement of capital
infusions, or that are expected to result in the restructuring of, or a plan of reorganization for, an investment are recorded as realized losses. Ongoing expenditures to protect or enhance an investment are treated as operating expenses.
F Use of
Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications
Under each
Funds organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to each Fund. Under Massachusetts law, if certain conditions prevail,
shareholders of a Massachusetts business trust (such as a Fund) could be deemed to have personal liability for the obligations of the Fund. However, each Funds Declaration of Trust contains an express disclaimer of liability on the part of
Fund shareholders and the By-laws provide that the Fund shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, each Fund enters into agreements with service providers that may contain indemnification clauses. Each
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.
H Floating Rate Notes Issued in Conjunction with Securities Held
The Funds may
invest in residual interest bonds, also referred to as inverse floating rate securities, whereby a Fund may sell a variable or fixed rate bond to a broker for cash. At the same time, the Fund buys a residual interest in the assets and cash flows of
a Special-Purpose Vehicle (the SPV), (which is generally organized as a trust), set up by the broker. The broker deposits a bond into the SPV with the same CUSIP number as the bond sold to the broker by the Fund, and which may have been, but is not
required to be, the bond purchased from the Fund (the Bond). The SPV also issues floating rate notes (Floating Rate Notes) which are sold to third-parties. The residual interest bond held by a Fund gives the Fund the right (1) to cause the
holders of the Floating Rate Notes to generally tender their notes at par, and (2) to have the broker transfer the Bond held by the SPV to the Fund, thereby terminating the SPV. Should the Fund exercise such right, it would generally pay the
broker the par amount due on the Floating Rate Notes and exchange the residual interest bond for the underlying Bond. Pursuant to generally accepted accounting principles for transfers and servicing of financial assets and extinguishment of
liabilities, the Funds account for the transaction described above as a secured borrowing by including the Bond in their Portfolio of Investments and the Floating Rate Notes as a liability under the caption Payable for floating rate notes
issued in their Statement of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date.
Accordingly, the fair value of the payable for floating rate notes issued approximates its carrying value. If measured at fair value, the payable for floating rate notes would have been considered as Level 2 in the fair value hierarchy (see Note 10)
at March 31, 2013. Interest expense related to the Funds liability with respect to Floating Rate Notes is recorded as incurred. The SPV may be terminated by the Fund, as noted above, or by the broker upon the occurrence of certain
termination events as defined in the trust agreement, such as a downgrade in the credit quality of the underlying Bond, bankruptcy of or payment failure by the issuer of the underlying Bond, the inability to remarket Floating Rate Notes that have
been tendered due to insufficient buyers in the market, or the failure by the SPV to obtain renewal of the liquidity agreement under which liquidity support is provided for the Floating Rate Notes up to one year. Structuring fees paid to the
liquidity provider upon the creation of an SPV have been recorded as debt issuance costs and are being amortized as interest expense to the expected maturity of the related trust.
Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
Unamortized structuring fees related to a terminated SPV are recorded as a realized loss on extinguishment of debt. At March 31, 2013, the amounts of the Funds Floating Rate Notes and
related interest rates and collateral were as follows:
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Municipal
Fund II
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California
Fund II
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Massachusetts
Fund
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Floating Rate Notes Outstanding
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$
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41,925,000
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$
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9,885,000
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$
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3,330,000
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Interest Rate or Range of Interest Rates (%)
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0.12 - 0.32
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0.12 - 0.17
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0.12 - 0.13
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Collateral for Floating Rate Notes Outstanding
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$
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53,163,505
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$
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12,163,579
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$
|
4,554,328
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New Jersey
Fund
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New York
Fund II
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Ohio
Fund
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Pennsylvania
Fund
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Floating Rate Notes Outstanding
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$
|
245,000
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$
|
8,010,000
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$
|
250,000
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$
|
2,040,000
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Interest Rate or Range of Interest Rates (%)
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0.27
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0.12 - 0.14
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0.12 - 0.38
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0.13 - 0.38
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Collateral for Floating Rate Notes Outstanding
|
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$
|
265,570
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$
|
10,503,904
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$
|
493,070
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$
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3,178,064
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For the six months ended March 31, 2013, the Funds average Floating Rate Notes outstanding and the average interest rate
(annualized) including fees and amortization of deferred debt issuance costs were as follows:
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Municipal
Fund II
|
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California
Fund II
|
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Massachusetts
Fund
|
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Average Floating Rate Notes Outstanding
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$
|
42,581,923
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$
|
9,885,000
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$
|
3,330,000
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Average Interest Rate
|
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0.73
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%
|
|
|
0.71
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%
|
|
|
0.69
|
%
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New Jersey
Fund
|
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New York
Fund II
|
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Ohio
Fund
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Pennsylvania
Fund
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|
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Average Floating Rate Notes Outstanding
|
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$
|
3,064,396
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$
|
8,617,088
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$
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250,000
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|
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$
|
2,040,000
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Average Interest Rate
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0.97
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%
|
|
|
0.76
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%
|
|
|
0.99
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%
|
|
|
0.82
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%
|
The Funds may enter into shortfall and forbearance agreements with the broker by which a Fund agrees to reimburse the broker, in
certain circumstances, for the difference between the liquidation value of the Bond held by the SPV and the liquidation value of the Floating Rate Notes, as well as any shortfalls in interest cash flows. The Funds had no shortfalls as of
March 31, 2013.
The Funds may also purchase residual interest bonds from brokers in a secondary market transaction without first owning the
underlying bond. Such transactions are not required to be treated as secured borrowings. Shortfall agreements, if any, related to residual interest bonds purchased in a secondary market transaction are disclosed in the Portfolio of Investments.
The Funds investment policies and restrictions expressly permit investments in residual interest bonds. Such bonds typically offer the potential
for yields exceeding the yields available on fixed rate bonds with comparable credit quality and maturity. These securities tend to underperform the market for fixed rate bonds in a rising long-term interest rate environment, but tend to outperform
the market for fixed rate bonds when long-term interest rates decline. The value and income of residual interest bonds are generally more volatile than that of a fixed rate bond. The Funds investment policies do not allow the Funds to borrow
money except as permitted by the 1940 Act. Management believes that the Funds restrictions on borrowing money and issuing senior securities (other than as specifically permitted) do not apply to Floating Rate Notes issued by the SPV and
included as a liability in the Funds Statement of Assets and Liabilities. As secured indebtedness issued by an SPV, Floating Rate Notes are distinct from the borrowings and senior securities to which the Funds restrictions apply.
Residual interest bonds held by the Funds are securities exempt from registration under Rule 144A of the Securities Act of 1933.
I Financial Futures Contracts
Upon entering into a financial futures contract, a Fund is required to deposit with the broker,
either in cash or securities, an amount equal to a certain percentage of the purchase price (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.
Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
J Interest Rate Swaps
Pursuant to interest rate swap agreements, a Fund makes
periodic payments at a fixed interest rate and, in exchange, receives payments based on the interest rate of a benchmark industry index. Payments received or made are recorded as realized gains or losses. During the term of the outstanding swap
agreement, changes in the underlying value of the swap are recorded as unrealized gains or losses. The value of the swap is determined by changes in the relationship between two rates of interest. A Fund is exposed to credit loss in the event of
non-performance by the swap counterparty. Risk may also arise from movements in interest rates.
K When-Issued Securities and Delayed Delivery Transactions
The Funds may purchase or sell securities on a delayed delivery or
when-issued basis. Payment and delivery may take place after the customary settlement period for that security. At the time the transaction is negotiated, the price of the security that will be delivered is fixed. The Funds maintain security
positions for these commitments such that sufficient liquid assets will be available to make payments upon settlement. Securities purchased on a delayed delivery or when-issued basis are marked-to-market daily and begin earning interest on
settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
L Statement of Cash Flows
The cash amount shown in the Statement of Cash Flows
of a Fund is the amount included in the Funds Statement of Assets and Liabilities and represents the cash on hand at its custodian and does not include any short-term investments.
M Interim Financial Statements
The interim financial statements relating to
March 31, 2013 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Funds management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
2 Auction Preferred Shares
Each Fund issued Auction Preferred Shares (APS) on January 15, 2003 in a public offering. The underwriting discounts and other offering costs incurred in
connection with the offering were recorded as a reduction of the paid-in capital of the common shares of each respective Fund. Dividends on the APS, which accrue daily, are cumulative at rates which are reset every seven days by an auction, unless a
special dividend period has been set. If the APS auctions do not successfully clear, the dividend payment rate over the next period for the APS holders is set at a specified maximum applicable rate until such time as the APS auctions are successful.
The maximum applicable rate on the APS is 110% (150% for taxable distributions) of the greater of the 1) AA Financial Composite Commercial Paper Rate or 2) Taxable Equivalent of the Short-Term Municipal Obligation Rate on the date
of the auction. The stated spread over the reference benchmark rate is determined based on the credit rating of the APS. Series of APS are identical in all respects except for the reset dates of the dividend rates.
The APS are redeemable at the option of each Fund at a redemption price equal to $25,000 per share, plus accumulated and unpaid dividends, on any dividend payment
date. The APS are also subject to mandatory redemption at a redemption price equal to $25,000 per share, plus accumulated and unpaid dividends, if a Fund is in default for an extended period on its asset maintenance requirements with respect to the
APS. If the dividends on the APS remain unpaid in an amount equal to two full years dividends, the holders of the APS as a class have the right to elect a majority of the Board of Trustees. In general, the holders of the APS and the common
shares have equal voting rights of one vote per share, except that the holders of the APS, as a separate class, have the right to elect at least two members of the Board of Trustees. The APS have a liquidation preference of $25,000 per share, plus
accumulated and unpaid dividends. Each Fund is required to maintain certain asset coverage with respect to the APS as defined in the Funds By-laws and the 1940 Act. Each Fund pays an annual fee up to 0.15% of the liquidation value of the APS
to broker/dealers as a service fee if the auctions are unsuccessful; otherwise, the annual fee is 0.25%.
3 Distributions to
Shareholders
Each Fund intends to make monthly distributions of net investment income to common shareholders, after payment of any dividends on any
outstanding APS. In addition, at least annually, each Fund intends to distribute all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards, if any). Distributions to common shareholders are recorded
on the ex-dividend date. Distributions to preferred shareholders are recorded daily and are payable at the end of each dividend period. The dividend rates for APS at March 31, 2013, and the amount of dividends accrued (including capital gains,
if any) to APS shareholders, average APS dividend rates (annualized), and dividend rate ranges for the six months then ended were as follows:
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Municipal
Fund II
(Series A)
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Municipal
Fund II
(Series B)
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California
Fund II
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Massachusetts
Fund
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|
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Michigan
Fund
|
|
|
|
|
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|
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APS Dividend Rates at March 31, 2013
|
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0.20
|
%
|
|
|
0.20
|
%
|
|
|
0.20
|
%
|
|
|
0.20
|
%
|
|
|
0.20
|
%
|
Dividends Accrued to APS Shareholders
|
|
$
|
25,102
|
|
|
$
|
25,485
|
|
|
$
|
28,478
|
|
|
$
|
15,062
|
|
|
$
|
14,650
|
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Average APS Dividend Rates
|
|
|
0.23
|
%
|
|
|
0.23
|
%
|
|
|
0.22
|
%
|
|
|
0.22
|
%
|
|
|
0.22
|
%
|
Dividend Rate Ranges (%)
|
|
|
0.13 - 0.32
|
|
|
|
0.14 - 0.32
|
|
|
|
0.13 - 0.32
|
|
|
|
0.13 - 0.32
|
|
|
|
0.13 - 0.32
|
|
Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
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|
|
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|
New Jersey
Fund
|
|
|
New York
Fund II
|
|
|
Ohio
Fund
|
|
|
Pennsylvania
Fund
|
|
|
|
|
|
|
APS Dividend Rates at March 31, 2013
|
|
|
0.20
|
%
|
|
|
0.20
|
%
|
|
|
0.20
|
%
|
|
|
0.20
|
%
|
Dividends Accrued to APS Shareholders
|
|
$
|
21,460
|
|
|
$
|
14,767
|
|
|
$
|
19,382
|
|
|
$
|
24,433
|
|
Average APS Dividend Rates
|
|
|
0.22
|
%
|
|
|
0.22
|
%
|
|
|
0.23
|
%
|
|
|
0.23
|
%
|
Dividend Rate Ranges (%)
|
|
|
0.13 - 0.32
|
|
|
|
0.13 - 0.32
|
|
|
|
0.14 - 0.32
|
|
|
|
0.13 - 0.32
|
|
Beginning February 13, 2008 and consistent with the patterns in the broader market for auction-rate securities, the Funds
APS auctions were unsuccessful in clearing due to an imbalance of sell orders over bids to buy the APS. As a result, the dividend rates of the APS were reset to the maximum applicable rates. The table above reflects such maximum dividend rates for
each series as of March 31, 2013.
The Funds distinguish between distributions on a tax basis and a financial reporting basis. Accounting principles
generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting
relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
4 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee
is earned by Eaton Vance Management (EVM) as compensation for investment advisory services rendered to each Fund. The fee is computed at an annual rate of 0.55% of each Funds average weekly gross assets and is payable monthly. Average weekly
gross assets include the principal amount of any indebtedness for money borrowed, including debt securities issued by a Fund, and the amount of any outstanding APS issued by the Fund. Pursuant to a fee reduction agreement with EVM, average weekly
gross assets are calculated by adding to net assets the liquidation value of a Funds APS then outstanding and the amount payable by the Fund to floating rate note holders, such adjustment being limited to the value of the APS outstanding prior
to any APS redemptions by the Fund. EVM also serves as the administrator of each Fund, but receives no compensation. For the six months ended March 31, 2013, the investment adviser fees were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
Fund II
|
|
|
California
Fund II
|
|
|
Massachusetts
Fund
|
|
|
Michigan
Fund
|
|
|
|
|
|
|
Investment Adviser Fee
|
|
$
|
609,872
|
|
|
$
|
236,956
|
|
|
$
|
119,680
|
|
|
$
|
99,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
Fund
|
|
|
New York
Fund II
|
|
|
Ohio
Fund
|
|
|
Pennsylvania
Fund
|
|
|
|
|
|
|
Investment Adviser Fee
|
|
$
|
167,361
|
|
|
$
|
159,608
|
|
|
$
|
144,585
|
|
|
$
|
183,270
|
|
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 fee. Trustees of the Funds who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation
Plan. For the six months ended March 31, 2013, no significant amounts have been deferred. Certain officers and Trustees of the Funds are officers of EVM.
5 Purchases and Sales of Investments
Purchases and sales of investments, other than
short-term obligations, for the six months ended March 31, 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
Fund II
|
|
|
California
Fund II
|
|
|
Massachusetts
Fund
|
|
|
Michigan
Fund
|
|
|
|
|
|
|
Purchases
|
|
$
|
5,437,656
|
|
|
$
|
1,220,479
|
|
|
$
|
1,130,240
|
|
|
$
|
4,217,467
|
|
Sales
|
|
$
|
5,405,485
|
|
|
$
|
2,081,444
|
|
|
$
|
929,984
|
|
|
$
|
5,123,478
|
|
Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
Fund
|
|
|
New York
Fund II
|
|
|
Ohio
Fund
|
|
|
Pennsylvania
Fund
|
|
|
|
|
|
|
Purchases
|
|
$
|
3,540,515
|
|
|
$
|
1,894,509
|
|
|
$
|
3,557,245
|
|
|
$
|
4,331,586
|
|
Sales
|
|
$
|
7,811,039
|
|
|
$
|
3,450,043
|
|
|
$
|
3,030,820
|
|
|
$
|
4,580,188
|
|
6 Common Shares of Beneficial Interest
Common shares issued pursuant to the Funds dividend reinvestment plan for the six months ended March 31, 2013 and the year ended September 30, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
Fund II
|
|
|
California
Fund II
|
|
|
Massachusetts
Fund
|
|
|
Michigan
Fund
|
|
|
|
|
|
|
Six Months Ended March 31, 2013 (Unaudited)
|
|
|
4,837
|
|
|
|
1,517
|
|
|
|
692
|
|
|
|
144
|
|
Year Ended September 30, 2012
|
|
|
17,109
|
|
|
|
2,340
|
|
|
|
2,043
|
|
|
|
1,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
Fund
|
|
|
New York
Fund II
|
|
|
Ohio
Fund
|
|
|
Pennsylvania
Fund
|
|
|
|
|
|
|
Six Months Ended March 31, 2013 (Unaudited)
|
|
|
3,216
|
|
|
|
556
|
|
|
|
1,147
|
|
|
|
1,153
|
|
Year Ended September 30, 2012
|
|
|
11,044
|
|
|
|
2,145
|
|
|
|
4,058
|
|
|
|
2,539
|
|
7 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of each Fund at March 31, 2013, as determined on a federal income tax basis, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
Fund II
|
|
|
California
Fund II
|
|
|
Massachusetts
Fund
|
|
|
Michigan
Fund
|
|
|
|
|
|
|
Aggregate cost
|
|
$
|
162,260,515
|
|
|
$
|
67,825,626
|
|
|
$
|
35,109,549
|
|
|
$
|
31,523,304
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
21,308,801
|
|
|
$
|
8,458,364
|
|
|
$
|
5,247,477
|
|
|
$
|
2,749,443
|
|
Gross unrealized depreciation
|
|
|
(8,441,671
|
)
|
|
|
(257,183
|
)
|
|
|
(37,267
|
)
|
|
|
(97,941
|
)
|
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
12,867,130
|
|
|
$
|
8,201,181
|
|
|
$
|
5,210,210
|
|
|
$
|
2,651,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
Fund
|
|
|
New York
Fund II
|
|
|
Ohio
Fund
|
|
|
Pennsylvania
Fund
|
|
|
|
|
|
|
Aggregate cost
|
|
$
|
50,396,743
|
|
|
$
|
42,509,002
|
|
|
$
|
45,025,625
|
|
|
$
|
57,698,420
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
6,399,066
|
|
|
$
|
4,641,711
|
|
|
$
|
5,985,307
|
|
|
$
|
5,402,065
|
|
Gross unrealized depreciation
|
|
|
(162,544
|
)
|
|
|
(272,573
|
)
|
|
|
(117,439
|
)
|
|
|
(266,119
|
)
|
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
6,236,522
|
|
|
$
|
4,369,138
|
|
|
$
|
5,867,868
|
|
|
$
|
5,135,946
|
|
8 Overdraft Advances
Pursuant to the custodian agreement, SSBT may, in its discretion, advance funds to the Funds to make properly authorized payments. When such payments result in an overdraft, the Funds are obligated to repay SSBT at
the current rate of interest charged by SSBT for secured loans (currently, the Federal Funds rate plus 2%). This obligation is payable on demand to SSBT. SSBT has a lien on a Funds assets to the extent of any overdraft. At
Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
March 31, 2013, Municipal Fund II had payments due to SSBT pursuant to the foregoing arrangement of $572,277. Based on the short-term nature of these payments and the variable interest rate,
the carrying value of the overdraft advances approximated its fair value at March 31, 2013. If measured at fair value, overdraft advances would have been considered as Level 2 in the fair value hierarchy (see Note 10) at March 31, 2013.
The Funds average overdraft advances during the six months ended March 31, 2013 were not significant.
9 Financial
Instruments
The Funds may trade in financial instruments with off-balance sheet risk in the normal course of their investing activities. These financial
instruments may include financial futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the
investment a Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and
offsetting transactions are considered.
A summary of obligations under these financial instruments at March 31, 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures Contracts
|
|
Fund
|
|
Expiration
Month/Year
|
|
|
Contracts
|
|
Position
|
|
Aggregate
Cost
|
|
|
Value
|
|
|
Net
Unrealized
Depreciation
|
|
|
|
|
|
|
|
|
Municipal II
|
|
|
6/13
|
|
|
72
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(10,350,606
|
)
|
|
$
|
(10,401,750
|
)
|
|
$
|
(51,144
|
)
|
California II
|
|
|
6/13
|
|
|
25
U.S. 10-Year Treasury Note
|
|
Short
|
|
$
|
(3,268,509
|
)
|
|
$
|
(3,299,610
|
)
|
|
$
|
(31,101
|
)
|
|
|
|
6/13
|
|
|
28
U.S. 30-Year Treasury Bond
|
|
Short
|
|
|
(3,990,173
|
)
|
|
|
(4,045,125
|
)
|
|
|
(54,952
|
)
|
Massachusetts
|
|
|
6/13
|
|
|
14
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(2,012,617
|
)
|
|
$
|
(2,022,562
|
)
|
|
$
|
(9,945
|
)
|
Michigan
|
|
|
6/13
|
|
|
6
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(862,551
|
)
|
|
$
|
(866,813
|
)
|
|
$
|
(4,262
|
)
|
New Jersey
|
|
|
6/13
|
|
|
75
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(10,687,963
|
)
|
|
$
|
(10,835,157
|
)
|
|
$
|
(147,194
|
)
|
New York II
|
|
|
6/13
|
|
|
22
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(3,162,685
|
)
|
|
$
|
(3,178,312
|
)
|
|
$
|
(15,627
|
)
|
Ohio
|
|
|
6/13
|
|
|
20
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(2,875,168
|
)
|
|
$
|
(2,889,375
|
)
|
|
$
|
(14,207
|
)
|
Pennsylvania
|
|
|
6/13
|
|
|
60
U.S. 30-Year Treasury Bond
|
|
Short
|
|
$
|
(8,550,370
|
)
|
|
$
|
(8,668,125
|
)
|
|
$
|
(117,755
|
)
|
At March 31, 2013, the Funds had sufficient cash and/or securities to cover commitments under these contracts.
Each Fund is subject to interest rate risk in the normal course of pursuing its investment objective. Because the Funds hold fixed-rate bonds, the value of these
bonds may decrease if interest rates rise. The Funds purchase and sell U.S. Treasury futures contracts to hedge against changes in interest rates.
Eaton Vance
Municipal Bond Funds
March 31, 2013
Notes to Financial Statements (Unaudited) continued
The fair values of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is interest rate risk at March 31, 2013
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
Fund II
|
|
|
California
Fund II
|
|
|
Massachusetts
Fund
|
|
|
Michigan
Fund
|
|
|
|
|
|
|
Liability Derivative:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures Contracts
|
|
$
|
(51,144
|
)
(1)
|
|
$
|
(86,053
|
)
(1)
|
|
$
|
(9,945
|
)
(1)
|
|
$
|
(4,262
|
)
(1)
|
|
|
|
|
|
Total
|
|
$
|
(51,144
|
)
|
|
$
|
(86,053
|
)
|
|
$
|
(9,945
|
)
|
|
$
|
(4,262
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Jersey
Fund
|
|
|
New York
Fund II
|
|
|
Ohio
Fund
|
|
|
Pennsylvania
Fund
|
|
|
|
|
|
|
Liability Derivative:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures Contracts
|
|
$
|
(147,194
|
)
(1)
|
|
$
|
(15,627
|
)
(1)
|
|
$
|
(14,207
|
)
(1)
|
|
$
|
(117,755
|
)
(1)
|
|
|
|
|
|
Total
|
|
$
|
(147,194
|
)
|
|
$
|
(15,627
|
)
|
|
$
|
(14,207
|
)
|
|
$
|
(117,755
|
)
|
(1)
|
Amount represents cumulative unrealized appreciation or (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 of Assets and Liabilities as Receivable or Payable for variation margin, as applicable.
|
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is interest rate risk for
the six months ended March 31, 2013 was as follows:
Officers and Trustees
Officers of Eaton Vance Municipal Bond Funds
Cynthia J. Clemson
President of EIA, MIW, NYH,
EIO and EIP
Thomas M. Metzold
President of MAB, EIV and EMJ
Payson F. Swaffield
Vice President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. ONeil
Chief Compliance Officer
Trustees of Eaton Vance
Municipal Bond Funds
Ralph F. Verni
Chairman
Scott E. Eston
Benjamin C. Esty
Thomas E. Faust Jr.*
Allen R. Freedman
William H. Park
Ronald A. Pearlman
Helen Frame Peters
Lynn A. Stout
Harriett Tee Taggart
Number of Employees
Each Fund is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a closed-end management
investment company, and has no employees.
Number of Shareholders
As of March 31, 2013, Fund records indicate that there are 17, 5, 3, 5, 6, 13, 6 and 28 registered shareholders for Municipal Fund II, California Fund II, Massachusetts Fund, Michigan Fund, New Jersey Fund,
New York Fund II, Ohio Fund and Pennsylvania Fund, respectively, and approximately 4,209, 1,247, 845, 847, 1,149, 1,044, 1,349 and 1,593 shareholders owning the Fund shares in street name, such as through brokers, banks and financial intermediaries
for Municipal Fund II, California Fund II, Massachusetts Fund, Michigan Fund, New Jersey Fund, New York Fund II, Ohio Fund and Pennsylvania Fund, respectively.
If you are a street name shareholder and wish to receive Fund reports directly, which contain important information about a Fund, please write or call:
Eaton Vance Distributors, Inc.
Two International Place
Boston,
MA 02110
1-800-262-1122
NYSE MKT
symbols
|
|
|
Municipal Bond Fund II
|
|
EIV
|
California Municipal Bond Fund II
|
|
EIA
|
Massachusetts Municipal Bond Fund
|
|
MAB
|
Michigan Municipal Bond Fund
|
|
MIW
|
|
|
|
New Jersey Municipal Bond Fund
|
|
EMJ
|
New York Municipal Bond Fund II
|
|
NYH
|
Ohio Municipal Bond Fund
|
|
EIO
|
Pennsylvania Municipal Bond Fund
|
|
EIP
|
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.
Additional Notice to
Shareholders.
A Fund also may purchase shares of its common stock in the open market when they trade at a discount to net asset value or
at other times if the Fund determines such purchases are advisable. There can be no assurance that a Fund will take such action or that such purchases would reduce the discount. If applicable, a Fund may also redeem or purchase its outstanding
auction preferred shares (APS) in order to maintain compliance with regulatory requirements, borrowing or rating agency requirements or for other purposes as it deems appropriate or necessary.
Closed-End Fund Information.
The Eaton Vance closed-end funds make certain fund performance data and information about portfolio characteristics (such as top holdings and asset allocation) available on the Eaton Vance website after
the end of each month. Certain fund performance data for the funds, including total returns, are posted to the website shortly after the end of each month. Portfolio holdings for the most recent month-end are also posted to the website approximately
30 days following the end of the month. This information is available at www.eatonvance.com on the fund information pages under Individual Investors Closed-End Funds.
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Investment Adviser and Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Custodian
State Street Bank and Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent
American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Fund Offices
Two
International Place
Boston, MA 02110