[EATON VANCE LOGO] [PHOTO OF EDUCATION SIGN]
Annual Report November 30, 2000
EATON VANCE
[PHOTO OF HIGHWAY AT NIGHT] MUNICIPAL
INCOME
TRUST
[PHOTO OF SUSPENSION BRIDGE]
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 2000
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER PRESIDENT]
As most investors know, municipal bonds have long occupied a unique position
among investment asset classes. Historically, the $1.5 trillion municipal
market has financed a broad range of important public projects, including
utilities, transportation facilities, hospitals, education, economic
development and housing projects. These projects address the needs of local
and state communities, generate new employment opportunities and improve the
quality of life for many citizens. We thought it might be helpful to
shareholders to begin a series of discussions with a broad overview of this
vital market.
REVENUE BONDS: PROVIDING FINANCING
FOR ESSENTIAL, FEE-BASED SERVICES...
Roughly two-thirds of all municipal bond issuance over the past decade has
consisted of revenue bonds. These bonds are issued by entities that charge
their customers a fee to provide essential services and include a very broad
range of issuers. Electric and water utilities, airport and turnpike
authorities, housing projects and hospitals are just a few examples of
entities that issue revenue bonds. Interest payments to bondholders are paid
from user fees paid for services.
For investors, credit quality is critical. Municipal bond analysts look for
trends that may impact an issuer's revenue base, which could include shifts
in demographics within the customer base, a rise or fall in competitive rates
for water or electric power, or changes in insurance reimbursements for
medical procedures. Those trends bear close watching, for any significant
change may have a major impact on the value of the investment.
GENERAL OBLIGATION BONDS:
BACKED BY THE "FULL FAITH AND CREDIT"
OF THE ISSUER...
General obligation bonds (GOs) constitute the remaining one-third of the
municipal market. Issued by states, counties, cities, towns, villages and
school districts, GOs are backed by the full faith and credit of the issuer,
as represented by the unlimited taxing power of the jurisdiction. Because of
that taxing power, GOs are often accorded a fairly high credit quality,
dependent, of course, on the creditworthiness of the community in question.
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
--------------------------------------------------------------------------------
MUNICIPAL BOND YIELDS EXCEEDED TREASURY YIELDS
30-Year AAA-rated
General Obligation (GO) Bonds*.......................................... 5.67%
Taxable equivalent yield
is 39.6% tax bracket.................................................... 9.39%
30-Year Treasury bond................................................... 5.61%
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 November 30, 2000.
Past performance is no guarantee of future sales.
Source: Bloomberg L.P.
--------------------------------------------------------------------------------
Investors analyze a community's economic base, looking for sound fundamentals
and a strong tax revenue base. In cases where that tax base is threatened,
credit quality may be jeopardized. For example, New York City was close to
bankruptcy in 1975 and its GO bonds performed very poorly. However, as the
City's fortunes improved in the 1980s and 1990s, its revenue base improved
significantly, leading to an upgrade in its bonds.
At Eaton Vance, we have long been major participants in the municipal market,
and have been active in bringing municipal alternatives to investors. While
the importance of the municipal market is apparent in the projects that
improve our lives, we believe that municipal bonds play an equally important
role for today's tax-conscious investors. We will continue to seek promising
opportunities in this important market.
Sincerely,
/s/ Thomas J. Fetter
----------------------
Thomas J. Fetter
President
January 11, 2001
2
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
MANAGEMENT DISCUSSION
[PHOTO OF THOMAS M. METZOLD PORTFOLIO MANAGER]
INVESTMENT ENVIRONMENT
- Following several years of remarkable growth, the U.S. economy finally showed
signs of slowing in the second half of 2000. Last year's rise in interest
rates, engineered by the Federal Reserve to check inflation, has resulted in
lower corporate profits, slower capital investment and weaker consumer demand.
- In contrast to a disappointing 1999, when municipal bonds declined under the
weight of rising interest rates, signs of weaker economic growth have prompted
an impressive rally in 2000. The Fed's moves generated hopes among
fixed-income investors that rates may soon be lowered, improving the outlook
for the bond markets.
- Municipal yields, which generally peaked in January, have since declined in
response to weakening economic indicators. Accordingly, bond prices, which
move in the opposite direction of interest rates, have moved higher.
MANAGEMENT DISCUSSION
- The market price of Eaton Vance Municipal Income Trust lagged the underlying
NAV significantly. In our view, that disparity reflected temporary investor
concerns amid continuing volatility in the equity markets and
still-to-be-resolved economic uncertainties. Because historically these
disparities have tended to narrow over time, we believe that the Trust
represented unusually good value at November 30, 2000.
- The Trust was able to establish some capital losses during the year to offset
potential capital gains, thereby helping to reduce tax liability. This
strategy also afforded the Trust the opportunity to potentially increase
income by using the proceeds to purchase higher-yielding bonds.
- In a low supply environment, management continued to work to strengthen the
Trust's call protection and other structural characteristics. Municipal supply
has been low because government surpluses at the state and federal levels have
lessened funding needs.
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 2.05% for the year ended November 30, 2000. That return was
the result of a decline in share price from $11.6875 on November 30, 1999 to
$11.125 on November 30, 2000, and the reinvestment of $0.785 in regular
monthly dividends.
- Based on net asset value, the Trust had a total return of 9.31% for the year
period ended November 30, 2000. That return was the result of an increase in
net asset value from $11.72 on November 30, 1999 to $11.95 on November 30,
2000, and the reinvestment of all distributions.
- Based on the most recent dividend and a share price of $11.125, the Trust had
a market yield of 6.70% at November 30, 2000.(1) The Trust's market yield is
equivalent to a taxable yield of 11.09%.(2)
RATING DISTRIBUTION(3)
----------------------------------------------------------------------
By total investments
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
A................................................................. 6.0%
AA................................................................ 16.6%
AAA............................................................... 30.4%
B................................................................. 1.0%
BB................................................................ 0.4%
BBB............................................................... 17.0%
Non-Rated......................................................... 28.6%
----------------------------------------------------------------------
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 NOVEMBER 30, 2000
PERFORMANCE(4)
-----------------------------------------------------------------------
Average Annual Total Returns (by market value, New York Stock Exchange)
-----------------------------------------------------------------------
One Year 2.05%
Life of Trust (1/29/99) -9.68%
Average Annual Total Returns (at net asset value)
-----------------------------------------------------------------------
One Year 9.31%
Life of Trust (1/29/99) -6.10%
For federal income tax purposes, 100% of the total dividends paid by the Fund
from net investment income during the year ended November 30, 2000 was
designated as an exempt-interest dividend.
FIVE LARGEST CATEGORIES(3)
-----------------------------------------------------------------------
Hospital 17.4%
General Obligations 12.3%
Industrial Development Revenue 9.3%
Issued Transportation* 7.5%
Housing 7.4%
*Private insurance does not reduce the interest rate risks that are
associated with these investments.
(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 NOVEMBER 30, 2000
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 98.9%
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Assisted Living -- 0.8%
-------------------------------------------------------------------------
$ 430 Delaware County, PA, IDA, (Glen Riddle),
(AMT), 8.125%, 9/1/05 $ 446,654
2,000 Delaware County, PA, IDA, (Glen Riddle),
(AMT), 8.625%, 9/1/25 2,139,180
-------------------------------------------------------------------------
$ 2,585,834
-------------------------------------------------------------------------
Certificates of Participation -- 0.5%
-------------------------------------------------------------------------
$ 2,000 Cliff House Trust, PA, (AMT),
6.625%, 6/1/27 $ 1,804,040
-------------------------------------------------------------------------
$ 1,804,040
-------------------------------------------------------------------------
Cogeneration -- 0.9%
-------------------------------------------------------------------------
$ 2,950 Maryland Energy Cogeneration, (AES
Warrior Run), (AMT), 7.40%, 9/1/19 $ 2,982,981
-------------------------------------------------------------------------
$ 2,982,981
-------------------------------------------------------------------------
Education -- 4.2%
-------------------------------------------------------------------------
$ 3,185 Florida Capital Projects Finance
Authority, Student Housing Revenue,
(Florida University), 7.75%, 8/15/20 $ 3,141,780
6,875 Massachusetts Development Finance
Agency, (Boston University),
5.45%, 5/15/59 6,407,019
4,750 New York Dormitory Authority, (State
University Educational Facilities),
4.75%, 5/15/28 4,104,427
-------------------------------------------------------------------------
$ 13,653,226
-------------------------------------------------------------------------
Electric Utilities -- 5.2%
-------------------------------------------------------------------------
$ 8,000 Brazos River Authority, TX, (Reliant
Energy, Inc.), 5.375%, 4/1/19 $ 7,137,440
1,500 North Carolina Eastern Municipal Power
Agency, (Power System Revenue),
5.75%, 1/1/26 1,412,760
7,250 North Carolina Municipal Power Agency ,
6.50%, 1/1/20 7,482,072
475 Ohio Air Quality Development Authority
PCR, (Ohio Edison Co.), Variable Rate,
9/1/18 475,000
300 Schuylkill County, PA, IDA,
(Northeastern Power), (AMT), Variable
Rate, 12/1/22 300,000
-------------------------------------------------------------------------
$ 16,807,272
-------------------------------------------------------------------------
Escrowed / Prerefunded -- 3.2%
-------------------------------------------------------------------------
$35,000 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity, 0.00%, 10/1/22 $ 8,397,550
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Escrowed / Prerefunded (continued)
-------------------------------------------------------------------------
$ 1,725 Maricopa County, AZ, IDA, (Place Five
and The Greenery), Escrowed to Maturity,
8.625%, 1/1/27 $ 2,100,998
-------------------------------------------------------------------------
$ 10,498,548
-------------------------------------------------------------------------
General Obligations -- 12.3%
-------------------------------------------------------------------------
$ 3,280 Bell Mountain Ranch, CO, Metropolitan
District, 6.625%, 11/15/25 $ 3,075,295
500 California, Variable Rate, 12/1/23(1)(2) 873,400
3,500 California, Residual Certificates,
Variable Rate, 9/1/30(2)(3) 3,335,955
15,735 Florida Board of Education,
4.75%, 6/1/28 14,012,647
4,000 Kershaw County, SC, School District,
5.00%, 2/1/18 3,876,480
8,500 Michigan Building Authority Revenue,
4.75%, 10/15/21 7,641,755
8,500 North East Independent School District,
TX, 4.50%, 10/1/28 7,152,920
-------------------------------------------------------------------------
$ 39,968,452
-------------------------------------------------------------------------
Hospital -- 17.4%
-------------------------------------------------------------------------
$ 4,000 Baxter County, AK, Community Hospital
District, 5.625%, 9/1/28 $ 3,347,160
3,265 Bell County, TX, (Heritage Oaks
Healthcare), 6.70%, 6/1/29 2,649,776
2,500 California Health Facilities Financing
Authority, (Cedars Sinai Medical
Center), Variable Rate, 12/1/34(1)(2) 2,654,025
1,000 Chautauqua County, NY, IDA, (Women's
Christian Association), 6.35%, 11/15/17 924,920
1,000 Chautauqua County, NY, IDA, (Women's
Christian Association), 6.40%, 11/15/29 850,060
1,500 Colorado Health Facilities Authority,
(Rocky Mountain Adventist),
6.625%, 2/1/22 1,414,560
1,000 Halifax, FL, Medical Center ,
7.25%, 10/1/24 950,020
2,870 Highland County, OH, (Joint Township
Hospital District), 6.75%, 12/1/29 2,564,546
3,500 John Tolfree Health System Corp., MI,
6.00%, 9/15/23 2,923,620
1,215 Loris, SC, Community Hospital District,
5.625%, 1/1/20 1,029,154
3,500 Loris, SC, Community Hospital District,
5.625%, 1/1/29 2,846,270
5,750 Louisiana Public Facilities Authority,
(Tuoro Infirmary), 5.625%, 8/15/29 5,048,270
2,000 Martin County, MN, (Fairmont Community
Hospital Association ), 6.625%, 9/1/22 1,811,420
SEE NOTES TO FINANCIAL STATEMENTS
4
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Hospital (continued)
-------------------------------------------------------------------------
$ 6,000 Massachusetts HEFA, (Partners Healthcare
System), 5.25%, 7/1/29 $ 5,222,820
1,700 Mecosta County, MI, General Hospital,
5.75%, 5/15/09 1,607,520
2,500 Mecosta County, MI, General Hospital,
6.00%, 5/15/18 2,131,700
4,260 New Jersey Health Care Facilities
Financing Authority, (Capital Health
System), 5.25%, 7/1/27 3,097,318
4,085 New Jersey Health Care Facilities
Financing Authority, (St. Barnabas
Health Center),
Variable Rate, 7/1/28(2)(3) 2,621,876
1,500 New Jersey Health Care Facilities
Financing Authority, (Trinitas
Hospital), 7.50%, 7/1/30 1,544,325
1,615 Oneonta, AL, Eastern Health Care
Facility Financing Authority,
7.75%, 7/1/21 1,662,110
7,000 Rhode Island HEFA, (St. Joseph Health
Services), 5.50%, 10/1/29 5,309,710
2,425 Southwestern Illinois, IDR, (Anderson
Hospital), 5.625%, 8/15/29 1,946,620
3,000 Weber County, UT, (IHC Health Services,
Inc.), 5.00%, 8/15/30 2,652,030
-------------------------------------------------------------------------
$ 56,809,830
-------------------------------------------------------------------------
Housing -- 7.4%
-------------------------------------------------------------------------
$ 3,600 California Statewide Communities
Development Authority, (Corporate Fund
for Housing), 7.25%, 12/1/34 $ 3,602,844
4,000 Charter Mac Equity, TN, (AMT),
6.625%, 6/30/09 3,945,680
980 Lake Creek, CO, Affordable Housing
Corp., Multifamily, 7.00%, 12/1/23 915,536
4,640 Louisiana Public Facilities Authority,
(Eden Point), 6.25%, 3/1/34 4,074,941
4,000 Muni Mae Tax Exempt Bond, LLC, (AMT),
Variable Rate, 6/30/09 3,974,200
3,430 North Little Rock, AR, Residential
Housing Facilities, (Parkstone Place),
6.50%, 8/1/21 3,225,881
3,700 Oregon Health Authority, (Trillium
Affordable Housing), (AMT),
6.75%, 8/15/29 3,435,857
1,000 Raleigh, NC, Housing Authority,
Multifamily, (Cedar Point) ,
7.00%, 11/1/30 841,790
-------------------------------------------------------------------------
$ 24,016,729
-------------------------------------------------------------------------
Industrial Development Revenue -- 9.3%
-------------------------------------------------------------------------
$ 1,990 Abia Development Corp., TX, (Austin
Cargoport Development), (AMT),
6.50%, 10/1/24 $ 1,764,274
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Industrial Development Revenue (continued)
-------------------------------------------------------------------------
$ 1,970 Broward County, FL, IDR, (Lynxs
Cargoport), (AMT), 6.75%, 6/1/19 $ 1,816,990
3,700 Charleston County, SC, IDA, (Zeigler
Coal), 6.95%, 8/10/28 555,000
4,000 Courtland, AL, Solid Waste Disposal,
(Champion International Corp.),
6.70%, 11/1/29 4,067,840
2,500 Denver, CO, City and County, (United
Airlines),
Variable Rate, 10/1/32(1)(2) 2,431,350
1,000 Gloucester County, NJ, Improvements
Authority, (Waste Management, Inc.),
7.00%, 12/1/29 1,031,610
2,500 Gulf Coast, TX, Waste Disposal
Authority, (Valero Energy Corp.) (AMT),
5.70%, 4/1/32 2,119,625
3,425 Middleboro, MA, (Read Corp.),
9.50%, 10/1/10 3,536,415
3,550 Mississippi Business Finance Corp.,
(System Energy Resources, Inc.),
5.90%, 5/1/22 3,278,389
3,000 Missouri Development Finance Authority,
Solid Waste Disposal, (Proctor and
Gamble Paper Products), (AMT),
5.20%, 3/15/29 2,841,360
5,750 Ohio Solid Waste Disposal, (USG Corp.),
(AMT), 5.65%, 3/1/33 3,729,795
3,550 Phoenix, AZ, IDA, (America West
Airlines, Inc.), (AMT), 6.25%, 6/1/19 3,087,506
-------------------------------------------------------------------------
$ 30,260,154
-------------------------------------------------------------------------
Insured-Education -- 0.8%
-------------------------------------------------------------------------
$ 3,000 Massachusetts HEFA, (Berklee College of
Music), (MBIA), Variable Rate,
10/1/27(1)(2) $ 2,639,340
-------------------------------------------------------------------------
$ 2,639,340
-------------------------------------------------------------------------
Insured-Electric Utilities -- 2.8%
-------------------------------------------------------------------------
$ 6,250 Brazos River Authority, TX, PCR, (Texas
Utilities Electric Co.), (MBIA), (AMT),
5.55%, 6/1/30 $ 6,086,375
3,000 Burke County, GA, Development Authority,
(Power Plant), (MBIA), (AMT),
5.45%, 5/1/34 2,886,660
-------------------------------------------------------------------------
$ 8,973,035
-------------------------------------------------------------------------
Insured-General Obligations -- 0.5%
-------------------------------------------------------------------------
$ 1,725 Lancaster County, SC, School District,
(FSA), 4.75%, 3/1/18 $ 1,602,784
-------------------------------------------------------------------------
$ 1,602,784
-------------------------------------------------------------------------
Insured-Hospital -- 4.5%
-------------------------------------------------------------------------
$10,000 New York Dormitory Authority, (Municipal
Health Facilities Improvement), (FSA),
4.75%, 1/15/29 $ 8,757,900
SEE NOTES TO FINANCIAL STATEMENTS
5
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Insured-Hospital (continued)
-------------------------------------------------------------------------
$ 6,900 New York Dormitory Authority, (New York
Presbyterian Hospital), (AMBAC),
4.75%, 8/1/27(4) $ 6,074,070
-------------------------------------------------------------------------
$ 14,831,970
-------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.4%
-------------------------------------------------------------------------
$ 5,000 San Mateo County, CA, Joint Powers
Financing Authority, (FSA), Variable
Rate, 7/15/29(1)(2) $ 4,440,650
-------------------------------------------------------------------------
$ 4,440,650
-------------------------------------------------------------------------
Insured-Transportation -- 7.5%
-------------------------------------------------------------------------
$ 2,850 Clark County, NV, Airport Revenue,
(MBIA), 6.00%, 7/1/29 $ 2,980,501
4,930 Dallas-Fort Worth, TX, International
Airport, (FGIC), (AMT), 5.75%, 11/1/30 4,934,831
4,500 Dallas-Fort Worth, TX, International
Airport, (FGIC), (AMT), 6.125%, 11/1/35 4,639,950
3,500 Florida Turnpike Authority, (Department
of Transportation), (FGIC),
4.50%, 7/1/27 2,996,490
4,250 Metropolitan Transportation Authority,
NY, Commuter Revenue (FGIC),
4.75%, 7/1/26 3,769,622
5,500 Nevada Department of Business and
Industry, (Las Vegas Monorail -1st
Tier), (AMBAC), 5.375%, 1/1/40 5,266,525
-------------------------------------------------------------------------
$ 24,587,919
-------------------------------------------------------------------------
Insured-Water and Sewer -- 1.3%
-------------------------------------------------------------------------
$ 5,000 Charleston, SC, Waterworks and Sewer
Revenue, (FGIC), 4.50%, 1/1/24 $ 4,274,150
-------------------------------------------------------------------------
$ 4,274,150
-------------------------------------------------------------------------
Miscellaneous -- 1.1%
-------------------------------------------------------------------------
$ 3,300 Santa Fe, NM, (Crow Hobbs),
8.50%, 9/1/16 $ 3,446,652
-------------------------------------------------------------------------
$ 3,446,652
-------------------------------------------------------------------------
Nursing Home -- 1.6%
-------------------------------------------------------------------------
$ 2,000 Orange County, FL, Health Facilities
Authority, (Westminster Community Care)
, 6.75%, 4/1/34 $ 1,763,180
2,000 Tarrant County, TX, Health Facilities,
(3927 Foundation), 10.25%, 9/1/19(5) 697,920
3,000 Wisconsin HEFA, (Wisconsin Illinois
Senior Housing), 7.00%, 8/1/29 2,769,420
-------------------------------------------------------------------------
$ 5,230,520
-------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Pooled Loans -- 0.9%
-------------------------------------------------------------------------
$ 667 Tax Exempt Securities Trust, Community
Health Provider, Pooled Loan Program,
6.00%, 12/1/36 $ 610,036
1,760 Tax Exempt Securities Trust, Community
Health Provider, Pooled Loan Program,
6.25%, 12/1/36 1,674,509
668 Tax Exempt Securities Trust, Community
Health Provider, Pooled Loan Program,
7.75%, 12/1/36 643,959
-------------------------------------------------------------------------
$ 2,928,504
-------------------------------------------------------------------------
Senior Living / Life Care -- 2.5%
-------------------------------------------------------------------------
$ 3,245 Logan County, CO, Industrial Development
Revenue, (TLC Care Choices, Inc.),
6.875%, 12/1/23 $ 2,869,943
1,400 Mesquite, TX, Health Facilities
Development Authority, (Christian
Retirement Facility), 7.625%, 2/15/28 1,398,166
3,700 Ohio HFA, Retirement Rental Housing,
(Encore Retirement Partners),
6.75%, 3/1/19 3,125,353
750 Okaloosa County, FL, Retirement Rental
Housing, (Encore Retirement Partners),
6.125%, 2/1/14 633,173
-------------------------------------------------------------------------
$ 8,026,635
-------------------------------------------------------------------------
Special Tax Revenue -- 2.7%
-------------------------------------------------------------------------
$ 3,600 Black Hawk, CO, Business Improvement
District, 6.50%, 12/1/11 $ 3,478,140
1,555 Longleaf, FL, Community Development
District, 6.20%, 5/1/09 1,487,684
1,955 Longleaf, FL, Community Development
District, 6.65%, 5/1/20 1,854,044
2,000 South Orange County, CA, Public
Financing Authority, DRIVERS, Variable
Rate, 8/15/15(2)(3) 2,072,660
-------------------------------------------------------------------------
$ 8,892,528
-------------------------------------------------------------------------
Transportation -- 2.8%
-------------------------------------------------------------------------
$ 4,000 Kent County, MI, Airport Facility,
(AMT), Variable Rate, 1/1/25(1)(2) $ 3,421,920
5,000 Los Angeles County, CA, Metropolitan
Transportation Authority, Variable Rate,
7/1/28(1)(2) 3,986,850
2,400 Massachusetts Turnpike Authority,
Metropolitan Highway System, Variable
Rate, 1/1/37(2)(3) 1,738,512
-------------------------------------------------------------------------
$ 9,147,282
-------------------------------------------------------------------------
Utilities - Electrical and Gas -- 2.3%
-------------------------------------------------------------------------
$ 8,500 San Antonio, TX, Electric and Natural
Gas Revenue, 4.50%, 2/1/21 $ 7,401,035
-------------------------------------------------------------------------
$ 7,401,035
-------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
6
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
PORTFOLIO OF INVESTMENTS CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Water and Sewer -- 5.0%
-------------------------------------------------------------------------
$ 5,000 Los Angeles, CA, Department of Water and
Power, Variable Rate, 2/15/30(1)(2) $ 5,353,100
2,500 Metropolitan Water District, CA,
(Southern California Waterworks),
Variable Rate, 7/1/27(2)(3) 2,129,575
2,100 New York, NY, City Municipal Water
Finance Authority (Water and Sewer
Systems Revenue), 5.50%, 6/15/33 2,088,912
6,500 Sacramento County, CA, Sanitation
District Financing Authority Revenue,
5.875%, 12/1/27 6,718,985
-------------------------------------------------------------------------
$ 16,290,572
-------------------------------------------------------------------------
Total Tax-Exempt Investments -- 98.9%
(identified cost $344,458,828) $322,100,642
-------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.1% $ 3,590,141
-------------------------------------------------------------------------
Net Assets -- 100.0% $325,690,783
-------------------------------------------------------------------------
AMT - Interest earned from these securities may be considered a tax
preference item for purposes of the Federal Alternative Minimum Tax.
At November 30, 2000, the concentration of the Trust's investments
in the various states, determined as a percentage of net assets, is
as follows:
California 10.8%
Texas 14.1%
Others, representing less than 10% individually 74.0%
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
November 30, 2000, 19.0% 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 3.5% to 6.4% of total investments.
(1) Security has been issued as an inverse floater bond.
(2) 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.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(5) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS
7
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF NOVEMBER 30, 2000
Assets
------------------------------------------------------
Investments, at value
(identified cost, $344,458,828) $322,100,642
Receivable for investments sold 30,000
Interest receivable 6,082,807
Prepaid expenses 16,758
------------------------------------------------------
TOTAL ASSETS $328,230,207
------------------------------------------------------
Liabilities
------------------------------------------------------
Payable for investments purchased $ 2,073,038
Payable for daily variation margin on
open financial futures contracts 56,250
Payable to affiliate for Trustees' fees 1,410
Payable for open swap contracts 43,800
Due to bank 286,210
Accrued expenses 78,716
------------------------------------------------------
TOTAL LIABILITIES $ 2,539,424
------------------------------------------------------
NET ASSETS $325,690,783
------------------------------------------------------
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 $131,000,000
Common Shares, $0.01 par value;
unlimited number of shares
authorized, 16,284,961 shares issued
and outstanding 162,850
Additional paid-in capital 241,669,454
Accumulated net realized loss (computed
on the basis of identified cost) (25,493,829)
Accumulated undistributed net investment
income 832,969
Net unrealized depreciation (computed on
the basis of identified cost) (22,480,661)
------------------------------------------------------
NET ASSETS $325,690,783
------------------------------------------------------
Net assets applicable to preferred
shares --
Auction Preferred Shares at
liquidation value $131,000,000
Cumulative undeclared dividends 14,722
------------------------------------------------------
NET ASSETS APPLICABLE TO PREFERRED
SHARES $131,014,722
------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $194,676,061
------------------------------------------------------
TOTAL NET ASSETS $325,690,783
------------------------------------------------------
Net Asset Value Per Common Share
------------------------------------------------------
($194,676,061 DIVIDED BY 16,284,961
COMMON SHARES ISSUED AND OUTSTANDING) $ 11.95
------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 2000
Investment Income
------------------------------------------------------
Interest $ 21,181,820
------------------------------------------------------
TOTAL INVESTMENT INCOME $ 21,181,820
------------------------------------------------------
Expenses
------------------------------------------------------
Investment adviser fee $ 2,229,471
Administration fee 636,917
Trustees fees and expenses 15,014
Preferred shares remarketing agent fee 328,397
Transfer and dividend disbursing
agent fees 166,666
Legal and accounting services 50,732
Custodian fee 119,303
Printing and postage 38,054
Miscellaneous 56,054
------------------------------------------------------
TOTAL EXPENSES $ 3,640,608
------------------------------------------------------
Deduct --
Reduction of custodian fee $ 80,456
------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 80,456
------------------------------------------------------
NET EXPENSES $ 3,560,152
------------------------------------------------------
NET INVESTMENT INCOME $ 17,621,668
------------------------------------------------------
Realized and Unrealized Gain (Loss)
------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(14,530,969)
Financial futures contracts (13,650)
------------------------------------------------------
NET REALIZED LOSS $(14,544,619)
------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 18,911,486
Financial futures contracts (78,675)
Interest rate swap contracts (43,800)
------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $ 18,789,011
------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 4,244,392
------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 21,866,060
------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
8
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) YEAR ENDED PERIOD ENDED
IN NET ASSETS NOVEMBER 30, 2000 NOVEMBER 30, 1999(1)
---------------------------------------------------------------------------------
From operations --
Net investment income $ 17,621,668 $ 13,332,034
Net realized loss (14,544,619) (10,949,210)
Net change in unrealized
appreciation (depreciation) 18,789,011 (41,269,672)
---------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 21,866,060 $ (38,886,848)
---------------------------------------------------------------------------------
Distributions to shareholders --
Preferred Shareholders --
From net investment income $ (5,330,835) $ (3,132,498)
Common Shareholders --
From net investment income $ (12,771,225) $ (8,886,175)
---------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (18,102,060) $ (12,018,673)
---------------------------------------------------------------------------------
Capital share transactions --
Proceeds from sale of
preferred shares $ -- $ 131,000,000
Proceeds from sale of common shares -- 241,500,000
Reinvestment of distributions
to shareholders 672,063 1,532,594
Offering costs and preferred shares
underwriting discounts -- (1,972,353)
---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS $ 672,063 $ 372,060,241
---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 4,436,063 $ 321,154,720
---------------------------------------------------------------------------------
Net Assets
---------------------------------------------------------------------------------
At beginning of year $ 321,254,720 $ 100,000
---------------------------------------------------------------------------------
AT END OF YEAR $ 325,690,783 $ 321,254,720
---------------------------------------------------------------------------------
Accumulated undistributed
net investement income
included in net assets
---------------------------------------------------------------------------------
AT END OF YEAR $ 832,969 $ 1,313,361
---------------------------------------------------------------------------------
(1) For the period from the start of business, January 29, 1999, to
November 30, 1999.
SEE NOTES TO FINANCIAL STATEMENTS
9
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING PERIODS STATED
YEAR ENDED NOVEMBER 30,
---------------------------------
2000(1) 1999(1)(2)
-------------------------------------------------------------------
Net asset value -- Beginning
of year (Common shares) $11.720 $15.000
-------------------------------------------------------------------
Income (loss) from operations
-------------------------------------------------------------------
Net investment income $ 1.083 $ 0.837
Net realized and unrealized
gain (loss) 0.260 (3.246)
-------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 1.343 $(2.409)
-------------------------------------------------------------------
Less distributions
-------------------------------------------------------------------
Preferred Shareholders --
From net investment income $(0.328) $(0.197)
Common Shareholders --
From net investment income $(0.785) $(0.550)
-------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(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 YEAR
(COMMON SHARES) $11.950 $11.720
-------------------------------------------------------------------
MARKET VALUE -- END OF YEAR
(COMMON SHARES) $11.125 $11.688
-------------------------------------------------------------------
TOTAL RETURN(3) 2.05% (18.74)%
-------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
10
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING PERIODS STATED
YEAR ENDED NOVEMBER 30,
---------------------------------
2000(1) 1999(1)(2)
-------------------------------------------------------------------
Ratios/Supplemental Data+ ++
-------------------------------------------------------------------
Net assets, end of year (000's
omitted) $325,691 $321,255
Ratios (As a percentage of
average net assets
attributable to common
shares):
Net expenses(4) 1.95% 1.76%(5)
Net expenses after
custodian fee
reduction(4) 1.91% 1.70%(5)
Net investment income(4) 9.47% 7.38%(5)
Portfolio Turnover 66% 151%
+ The expenses of the 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 net assets,
including amounts related to preferred shares, are as follows:
Ratios (As a percentage of
average total net assets):
Net expenses(4) 1.15% 1.14%(5)
Net expenses after
custodian fee
reduction(4) 1.12% 1.10%(5)
Net investment income(4) 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
Asset coverage per
preferred share(6) $ 62,155 $ 61,308
Involuntary liquidation
preference per preferred
share(7) $ 25,000 $ 25,000
Approximate market value
per preferred share(7) $ 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 NOVEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
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 January 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 December 31, 2000.
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 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.
12
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
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 generally accepted accounting principles 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.
J 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.
K 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.
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 3.25% to 5.25% and from 3.25% to 5.20% for
Series A and Series B Shares respectively, during the year ended
November 30, 2000. 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.
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 November 30, 2000 was 4.10% and 3.90%, for Series A and
Series B Shares, respectively. For the year ended November 30, 2000, the
Trust paid dividends to Auction Preferred shareholders amounting to
$2,643,920 and $2,686,915 for Series A and Series B Shares, respectively,
representing an average APS dividend rate for such period of 4.05% and 4.06%,
respectively.
13
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
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 year ended
November 30, 2000, the fee was equivalent to 0.70% of the Trust's average
weekly gross assets and amounted to $2,229,471. 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 year
ended November 30, 2000, the administrative fee amounted to $636,917.
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
year ended November 30, 2000, 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 $212,352,360 and $205,303,924,
respectively, for the year ended November 30, 2000.
6 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investment owned by the Trust at November 30, 2000, as computed for Federal
income tax purposes, are as follows:
AGGREGATE COST $344,458,828
------------------------------------------------------
Gross unrealized appreciation $ 4,395,952
Gross unrealized depreciation (26,754,138)
------------------------------------------------------
NET UNREALIZED DEPRECIATION $(22,358,186)
------------------------------------------------------
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:
YEAR ENDED NOVEMBER 30,
------------------------
2000 1999(1)
------------------------------------------------------------------
Sales $ -- $16,100,000
Shares issued pursuant to the Trust's
dividend reinvestment plan 61,394 116,900
------------------------------------------------------------------
NET INCREASE $61,394 $16,216,900
------------------------------------------------------------------
(1) For the period from the start of business, January 29, 1999 to
November 30, 1999.
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.
A summary of obligations under these financial instruments at November 30,
2000 is as follows:
FUTURES CONTRACTS
-------------------------------------------------------------------------------
EXPIRATION NET UNREALIZED
DATE(S) CONTRACTS POSITION DEPRECIATION
-------------------------------------------------------------------------------
3/01 100 Municipal Bond Futures Short $ (78,675)
At November 30, 2000, the Trust had sufficient cash and/or securities to
cover margin requirements on open
future contracts.
The Trust has entered into an interest rate swap agreement with Morgan
Guaranty Trust Company of New York whereby the Trust makes monthly payments
at a rate equal to the one-month LIBOR minus 0.1% on the notional amount of
$10,000,000. In exchange, the Trust receives payments equal to the total
return on the Municipal Market Data Rate on the same notional amount. The
value of the contract, which terminates at September 1, 2001, is recorded as
a payable for open swap contracts of $43,800 at November 30, 2000.
14
EATON VANCE MUNICIPAL INCOME TRUST AS OF NOVEMBER 30, 2000
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Eaton Vance Municipal Income Trust:
--------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Eaton Vance Municipal Income Trust (the Trust)
as of November 30, 2000, the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
the year ended November 30. 2000 and for the period from the start of business,
January 29, 1999, to November 30, 2000. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. Our
procedures included confirmation of securities held as of November 30, 2000 by
correspondence with the custodian and brokers; where replies were received from
brokers, we performed other auditing procedures. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights, referred to
above, present fairly, in all material respects, the financial position of Eaton
Vance Municipal Income Trust at November 30, 2000, and the results of its
operations, the changes in its net assets and its financial highlights for the
respective stated periods in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 29, 2000
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 inquiries 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 November 30, 2000, our records indicate that there are 200 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 NOVEMBER 30, 2000
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. Dyner
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,
Georgetown University Law Center
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
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE MUNICIPAL INCOME TRUST
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
151-1/01 CE-NASRC