UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-09141
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Eaton Vance Municipal Income Trust
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(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Name and Address of Agent for Services)
(617) 482-8260
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(registrant's Telephone Number)
November 30
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Date of Fiscal Year End
November 30, 2004
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Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
[EV LOGO]
[GRAPHIC IMAGE]
ANNUAL REPORT NOVEMBER 30, 2004
[GRAPHIC IMAGE]
EATON VANCE MUNICIPAL INCOME TRUST
[GRAPHIC IMAGE]
PRIVACY NOTICE
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, 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 customer's account, Eaton Vance may share information with
unaffiliated third parties that perform various required services such as
transfer agents, custodians and broker/dealers.
- 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 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, Boston Management and Research, and Eaton Vance
Distributors, Inc.
In addition, our Privacy Policy only applies to those Eaton Vance customers who
are individuals and who have a direct relationship with us. If a customer's
account (i.e., fund shares) is held in the name of a third-party financial
adviser/broker-dealer, it is likely that only such adviser's privacy policies
apply to the customer. This notice supersedes all previously issued privacy
disclosures.
For more information about Eaton Vance's Privacy Policy, please call
1-800-262-1122.
IMPORTANT NOTICE
REGARDING DELIVERY OF
SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission 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 ADVISER, MAY HOUSEHOLD THE MAILING OF YOUR
DOCUMENTS INDEFINITELY UNLESS YOU INSTRUCT EATON VANCE, OR YOUR FINANCIAL
ADVISER, 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 adviser.
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 adviser.
The Fund will file a schedule of its portfolio holdings on Form N-Q with the
Securities and Exchange Commission (the "SEC") for the first and third quarters
of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance
website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the
EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be
reviewed and copied at the SEC's public reference room in Washington, D.C. (call
1-800-732-0330 for information on the operation of the public reference room).
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 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 Fund or Portfolio voted proxies relating
to portfolio securities during the 12 month period ended June 30 without charge,
upon request, by calling 1-800-262-1122. This description is also available on
the Securities and Exchange Commission's website at http://www.sec.gov.
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER]
Thomas J. Fetter
President
The municipal bond market is a center of capital formation for states,
municipalities and, in some cases, private economic initiatives. In this edition
of our continuing educational series, we will discuss industrial development
revenue (IDR) bonds. IDR bonds have long been used as a financing mechanism by
local governments to provide assistance to local employers and encourage job
retention and creation within their communities.
IDR BONDS FINANCE PRIVATE ACTIVITIES THAT BENEFIT THE PUBLIC...
IDR bonds are issued by municipal authorities to finance projects and facilities
used by private corporations. Historically, IDR bonds have represented a
partnership between the private and public sectors - a source of dedicated
funding for companies and a source of job creation in projects beneficial to
local communities. The "Private-Activities" provision of the Tax Reform Act of
1986 permits issuance of tax-exempt bonds for specific activities, including
pollution control; gas and electric service; water distribution; wastewater
systems; solid waste disposal; airports and selected transportation projects;
and other industrial projects.
The Act also placed a cap on the dollar amount that may be raised for IDR bonds
in each state, limiting the amount to $50 per person/per state/per year, with a
$150 million maximum. These limitations provide protection against potential
abuse and ensure that tax-exempt IDR bonds will indeed be issued for projects
that will benefit the public.
IDR BONDS FINANCE UTILITY-RELATED PROJECTS AND OTHER INDUSTRIAL INITIATIVES...
Typically, IDR bond projects provide financing for manufacturing, processing or
utility facilities. Historically, about one-half of these bonds have been issued
to finance pollution control facilities for manufacturers and electric
utilities. As many utilities and manufacturers have been ordered to comply with
stricter environmental and fuel standards, pollution control bonds have helped
finance the retrofits of existing plants. Other IDR bonds have served as
inducements from state and local issuers to locate plants or build new
facilities, in the hope that such construction might generate further economic
growth for a community.
IDR BONDS ARE SECURED BY CORPORATE REVENUES - NOT THOSE OF STATE OR LOCAL
GOVERNMENTS...
IDR bond issues are secured by the credit of the underlying corporation. The
municipal issuing authority acts solely as a conduit to permit tax-exempt
financing. The corporation pledges to make payments sufficient to meet all debt
service obligations. Unlike some revenue issues, IDR bonds are backed by
revenues of the entire corporation, not solely by those of the project being
financed.
Because IDR bonds are backed by corporate revenues and not by the taxing
authority of a state or local jurisdiction, they have historically provided
coupon premiums above those of general obligations and other more traditional
revenue bonds. Bonds may be either collateralized or unsecured. Collateralized
bonds have a lien against the company's assets, which may provide bond holders
enhanced bargaining power in the event of a bankruptcy. Unsecured bonds have no
such lien.
WHILE PROVIDING NEW OPPORTUNITIES, IDR BONDS REQUIRE RIGOROUS ANALYSIS...
While IDR bonds may provide unusual investment opportunities, they also may
entail increased risk, and therefore, demand especially intensive analysis. At
Eaton Vance, we have credit analysts and resources dedicated to IDR bond
research.
IDR bonds represent a key segment of the municipal bond market and should remain
an important source of capital formation. In our view, the experience and
resources needed to evaluate these issues further demonstrates the value of
professional management. We will continue to look for opportunities in this
sector of the municipal market.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
January 12, 2005
SHARES OF THE FUNDS 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.
2
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
[PHOTO OF THOMAS M. METZOLD]
Thomas M. Metzold
Co-Manager
[PHOTO OF WILLIAM H. AHERN]
William H. Ahern
Co-Manager
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 12.54% for the year ended November 30, 2004. That return was
the result of an increase in share price from $15.55 on November 30, 2003, to
$16.15 on November 30, 2004, and the reinvestment of $1.19 per share in
regular monthly dividends.(1)
- Based on net asset value, the Trust had a total return of 7.28% for the year
ended November 30, 2004. That return was the result of a decrease in net asset
value per share from $14.09 on November 30, 2003, to $13.95 on November 30,
2004, and the reinvestment of $1.19 per share in regular monthly dividends.
- Based on the last dividend of the fiscal year and a share price of $16.15, the
Trust had a market yield of 7.37% at November 30, 2004.(2) The Trust's market
yield is equivalent to a taxable yield of 11.34%.(3)
MANAGEMENT DISCUSSION
- The expansion of the U.S. economy continued throughout the year ended November
30, 2004, bolstered by a stronger-than-expected third quarter GDP and the
brighter employment picture that emerged at the end of the fiscal year. One
key economic factor during the period, however, was the surge in gasoline and
energy prices, which raised fears that inflation could re-emerge. Amid those
concerns, the Federal Reserve Bank increased its benchmark Federal Funds
interest rate four times between June and November of 2004.
- Following a strong rally in the first half of the year, the municipal bond
market lost some momentum in the second half, as inflation remained a concern
for fixed-income investors. For the year ended November 30, 2004, the Lehman
Brothers Municipal Bond Index had a total return of 4.07%.(4)
- We are pleased to announce that, as of September 13, 2004, William H. Ahern
has joined the Trust's management team. Mr. Ahern joined Eaton Vance in 1989
as an analyst in the fixed-income department and was named a Portfolio Manager
in 1993. He serves as Portfolio Manager of 10 Eaton Vance tax-exempt mutual
funds, closed-end funds for eight states, as well as several other Eaton Vance
funds.
- Insured* transportation bonds constituted the Trust's largest sector weighting
at November 30, 2004. These issues have financed key projects within the
nation's air and highway transportation infrastructure. The Trust's holdings
included issues that financed projects for the Dallas-Fort Worth, Texas,
International Airport and for the Las Vegas, Nevada, monorail system.
- Hospital bonds were prominent holdings in the Trust. Given stricter Medicare
reimbursements and intense industry competition, management focused on
institutions we believe have sound financial structures and good management
and are well-positioned in their local markets.
- At November 30, 2004, the Trust had leverage in the amount of approximately
36% of the Trust's total assets. The Trust is leveraged through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of common
shares).
* Private insurance does not remove the risk of loss of principal associated
with insured investments.
THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE PORTFOLIO
MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS
STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
UPON MARKET OR OTHER CONDITIONS, AND THE INVESTMENT ADVISER DISCLAIMS ANY
RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS
INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS ARE BASED ON MANY
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF
OF ANY EATON VANCE FUND.
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(1) A portion of the Trust's income may be subject to federal income tax and/or
federal alternative minimum tax. Income may be subject to state tax.
(2) 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.
(3) Taxable-equivalent yield assumes maximum 35.0% federal income tax rate. A
lower rate would result in a lower tax-equivalent figure.
(4) It is not possible to invest directly in an Index. The Index's total return
does not reflect the commissions or expenses that would have been incurred
if an investor individually purchased or sold the securities represented in
the Index.
3
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
PERFORMANCE
TRUST INFORMATION
as of November 30, 2004
PERFORMANCE*
Average Annual Total Returns (by share price, New York Stock Exchange)
One Year 12.54%
Life of Trust (1/29/99) 8.64%
Average Annual Total Returns (by net asset value)
One Year 7.28%
Life of Trust (1/29/99) 5.95%
* Performance results reflect the effect of leverage resulting from the Trust's
issuance of Auction Preferred Shares.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN SHARE PRICE OR
NET ASSET VALUE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED.
INVESTMENT RETURN AND MARKET PRICE WILL FLUCTUATE SO THAT SHARES, WHEN SOLD,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE
STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY
BE LOWER OR HIGHER THAN QUOTED.
RATING DISTRIBUTION**
[PIE CHART]
AAA 39.1%
AA 6.8%
A 8.1%
BBB 17.1%
BB 1.3%
B 1.3%
CCC 1.4%
CC 0.4%
Non-Rated 24.5%
**RATING DISTRIBUTION SUBJECT TO CHANGE DUE TO ACTIVE MANAGEMENT.
4
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 152.0%
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
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COGENERATION -- 1.3%
$ 2,950 Maryland Energy Cogeneration, (AES Warrior Run), (AMT),
7.40%, 9/1/19 $ 3,014,457
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$ 3,014,457
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EDUCATION -- 2.6%
$ 2,250 California Educational Facilities Authority, Stanford University,
Residual Certificates, Variable Rate, 14.67%, 12/1/32(1)(2) $ 2,592,180
3,430 Massachusetts Development Finance Agency,
(Boston University), 5.45%, 5/15/59 3,551,593
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$ 6,143,773
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ELECTRIC UTILITIES -- 9.0%
$ 6,500 Brazos River Authority, TX, (Reliant Energy, Inc.),
7.75%, 12/1/18 $ 7,131,865
2,000 Brazos River Authority, TX, PCR (Texas Energy Co.), (AMT),
6.75%, 4/1/38 2,292,560
3,550 Mississippi Business Finance Corp., (System Energy
Resources, Inc.), 5.90%, 5/1/22 3,581,453
7,250 North Carolina Municipal Power Agency, (Catawba),
6.50%, 1/1/20 8,176,695
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$ 21,182,573
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ESCROWED / PREREFUNDED -- 8.8%
$ 5,000 Bakersfield, CA, (Bakersfield Assisted Living Center),
Escrowed to Maturity, 0.00%, 4/15/21 $ 2,234,350
35,000 Dawson Ridge, CO, Metropolitan District #1, Escrowed to
Maturity, 0.00%, 10/1/22 14,329,700
95 Delaware County, PA, IDA, (Glen Riddle), Escrowed to
Maturity, (AMT), 8.125%, 9/1/05 97,013
2,000 Delaware County, PA, IDA, (Glen Riddle), Prerefunded to
9/1/05, (AMT), 8.625%, 9/1/25 2,150,140
1,725 Maricopa County, AZ, IDA, (Place Five and The Greenery),
Escrowed to Maturity, 8.625%, 1/1/27 2,038,363
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$ 20,849,566
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GENERAL OBLIGATIONS -- 6.8%
$ 1,500 California, 5.25%, 11/1/29 $ 1,542,420
4,950 California, 5.50%, 11/1/33 5,215,320
2,000 Kershaw County, SC, School District, 5.00%, 2/1/18(3) 2,108,980
1,200 New York, NY, Variable Rate, 11.535%, 6/1/28(1)(2) 1,319,124
5,000 Puerto Rico, Variable Rate, 9.023%, 7/1/29(2)(4) 5,814,050
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$ 15,999,894
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HEALTH CARE-MISCELLANEOUS -- 1.2%
$ 608 Tax Exempt Securities Trust, Community Health Provider,
Pooled Loan Program, 6.00%, 12/1/36 $ 612,808
1,605 Tax Exempt Securities Trust, Community Health Provider,
Pooled Loan Program, 6.25%, 12/1/36 1,676,872
609 Tax Exempt Securities Trust, Community Health Provider,
Pooled Loan Program, 7.75%, 12/1/36 612,275
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$ 2,901,955
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HOSPITAL -- 21.0%
$ 2,500 California Health Facilities Authority, (Cedars Sinai Medical
Center), Variable Rate, 10.372%, 12/1/34(2)(4) $ 2,850,200
895 Chautauqua County, NY, IDA, (Women's Christian
Association), 6.35%, 11/15/17 840,136
975 Chautauqua County, NY, IDA, (Women's Christian
Association), 6.40%, 11/15/29 920,614
1,000 Halifax, FL, Medical Center, 7.25%, 10/1/24 1,086,180
6,000 Henderson, NV, Health Care Facility, 5.625%, 7/1/24 6,190,260
2,725 Highland County, OH, (Joint Township Hospital District),
6.75%, 12/1/29 2,679,792
5,000 Illinois Health Facility Authority, (Loyola University Health
System), 6.00%, 7/1/21 5,204,850
2,575 Louisiana Public Facilities Authority, (Tuoro Infirmary),
5.625%, 8/15/29 2,602,269
2,000 Martin County, MN, (Fairmont Community Hospital
Association), 6.625%, 9/1/22 2,049,720
1,150 Mecosta County, MI, General Hospital, 5.75%, 5/15/09 1,177,232
2,500 Mecosta County, MI, General Hospital, 6.00%, 5/15/18 2,451,375
4,260 New Jersey Health Care Facilities Financing Authority,
(Capital Health System), 5.25%, 7/1/27 4,282,195
1,500 New Jersey Health Care Facilities Financing Authority,
(Trinitas Hospital), 7.50%, 7/1/30 1,681,215
5,000 North Central, TX, Health Facility Development Corp.,
(Baylor Healthcare System), 5.125%, 5/15/29 5,028,550
1,470 Oneonta, AL, Eastern Health Care Facility Financing
Authority, (Eastern Health Systems, Inc.), 7.75%, 7/1/21 1,629,392
7,000 Rhode Island HEFA, (St. Joseph Health Services),
5.50%, 10/1/29 6,512,030
2,425 Southwestern Illinois, Development Authority, (Anderson
Hospital), 5.625%, 8/15/29 2,374,075
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$ 49,560,085
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HOUSING -- 13.2%
$ 990 California Statewide Communities Development Authority,
(AMT), Variable Rate, 33.556%, 12/1/34(2)(4) $ 906,790
4,000 Charter Mac Equity Trust, TN, 6.00%, 4/30/19 4,283,000
4,000 Charter Mac Equity Trust, TN, (AMT), 6.625%, 6/30/09 4,426,160
See notes to financial statements
5
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
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HOUSING (CONTINUED)
$ 3,185 Florida Capital Projects Finance Authority, Student Housing
Revenue, (Florida University), 7.75%, 8/15/20 $ 3,229,622
880 Lake Creek, CO, Affordable Housing Corp., Multifamily,
7.00%, 12/1/23 793,584
4,460 Louisiana Public Facilities Authority, (Eden Point),
6.25%, 3/1/34 3,841,933
4,000 Muni Mae Tax-Exempt Bond, LLC, (AMT),
6.875%, 6/30/09 4,467,800
3,080 North Little Rock, AR, Residential Housing Facilities,
(Parkstone Place), 6.50%, 8/1/21 2,842,840
3,550 Oregon Health Authority, (Trillium Affordable Housing),
(AMT), 6.75%, 2/15/29 3,149,347
970 Raleigh, NC, Housing Authority, Multifamily, (Cedar Point),
7.00%, 11/1/30(5) 98,455
3,300 Texas Student Housing Corp., (University of Northern Texas),
6.75%, 7/1/16 3,205,752
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$ 31,245,283
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INDUSTRIAL DEVELOPMENT REVENUE -- 7.2%
$ 1,870 ABIA Development Corp., TX, (Austin Cargoport
Development), (AMT), 6.50%, 10/1/24 $ 1,702,789
1,772 Broward County, FL, IDR, (Lynxs Cargoport), (AMT),
6.75%, 6/1/19 1,622,484
2,500 Gulf Coast, TX, Waste Disposal Authority, (Valero Energy
Corp.) (AMT), 5.70%, 4/1/32 2,516,275
2,000 Kenton County, KY, Airport, (Delta Airlines), (AMT),
7.125%, 2/1/21 1,546,600
6,000 New Jersey EDA, (Continental Airlines), (AMT),
6.25%, 9/15/29 4,620,000
3,500 New York City, NY, IDA, (American Airlines, Inc.), (AMT),
8.50%, 8/1/28 2,771,300
2,950 Phoenix, AZ, IDA, (America West Airlines, Inc.), (AMT),
6.25%, 6/1/19 2,217,367
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$ 16,996,815
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INSURED-EDUCATION -- 1.3%
$ 3,000 Massachusetts HEFA, (Berklee College of Music), (MBIA),
Variable Rate, 8.30%, 10/1/27(2)(4) $ 3,123,720
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$ 3,123,720
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INSURED-ELECTRIC UTILITIES -- 0.7%
$ 100 Los Angeles, CA, Department of Water and Power, (MBIA),
Variable Rate, 458.187%, 2/15/30(1)(2) $ 283,900
1,350 Wamego, KS, PCR, (MBIA), 5.30%, 6/1/31 1,413,301
-----------------------------------------------------------------------------------------------------------------
$ 1,697,201
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INSURED-ESCROWED / PREREFUNDED -- 1.8%
$ 4,250 Metropolitan Transportation Authority of New York,
Escrowed to Maturity, (FGIC), 4.75%, 7/1/26 $ 4,232,065
-----------------------------------------------------------------------------------------------------------------
$ 4,232,065
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INSURED-GENERAL OBLIGATIONS -- 13.0%
$ 3,500 California, (FGIC), Variable Rate, 11.925%, 9/1/30(1)(2) $ 3,887,625
500 California, (FGIC), Variable Rate, 88.267%, 12/1/29(1)(2) 1,422,150
2,000 Chicago, IL, (MBIA), 5.00%, 1/1/41 1,998,240
30,160 Chicago, IL, Board of Education, (FGIC), 0.00%, 12/1/22 12,202,434
13,000 Illinois Development Finance Authority, (Local Government
Program-Elgin School District-U46), (FSA), 0.00%, 1/1/20 6,272,110
4,000 Puerto Rico, (FSA), Variable Rate, 12.446%, 7/1/27(1)(2) 5,001,400
-----------------------------------------------------------------------------------------------------------------
$ 30,783,959
-----------------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 8.9%
$ 19,705 Kentucky EDA, (Norton Healthcare, Inc.), (MBIA),
0.00%, 10/1/25 $ 6,757,436
22,770 Kentucky EDA, (Norton Healthcare, Inc.), (MBIA),
0.00%, 10/1/26 7,340,593
10,000 Kentucky EDA, (Norton Healthcare, Inc.), (MBIA),
0.00%, 10/1/27 3,033,800
4,000 New Jersey Health Care Facilities Financing Authority,
(St. Barnabas Medical Center), (MBIA), Variable Rate,
10.448%, 7/1/28(1)(2) 3,938,000
-----------------------------------------------------------------------------------------------------------------
$ 21,069,829
-----------------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 23.1%
$ 3,500 Chicago, IL, O'Hare International Airport, (AMBAC), (AMT),
5.375%, 1/1/32 $ 3,584,700
2,500 Dallas-Fort Worth, TX, International Airport, (FGIC), (AMT),
5.50%, 11/1/20 2,676,725
4,930 Dallas-Fort Worth, TX, International Airport, (FGIC), (AMT),
5.75%, 11/1/30 5,153,280
4,500 Dallas-Fort Worth, TX, International Airport, (FGIC), (AMT),
6.125%, 11/1/35 4,913,775
4,000 Massachusetts Turnpike Authority, Metropolitan Highway
System, (MBIA), 5.00%, 1/1/37 4,012,280
2,400 Massachusetts Turnpike Authority, Metropolitan Highway
System, (MBIA), Variable Rate, 11.257%, 1/1/37(1)(2) 2,422,104
3,500 Miami-Dade County, FL, International Airport, (FGIC),
5.00%, 10/1/37 3,519,215
7,500 Minneapolis and St. Paul, MN, Metropolitan Airport
Commission, (FGIC), 5.25%, 1/1/32 7,772,850
5,500 Nevada Department of Business and Industry,
(Las Vegas Monorail-1st Tier), (AMBAC), 5.375%, 1/1/40 5,655,980
2,000 Puerto Rico Highway and Transportation Authority, (FSA),
Variable Rate, 11.175%, 7/1/32(1)(2) 2,115,440
See notes to financial statements
6
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-----------------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION (CONTINUED)
$ 7,000 San Antonio, TX, Airport System, (Improvements), (FGIC),
(AMT), 5.25%, 7/1/21 $ 7,281,470
1,500 South Carolina Transportation Infrastructure, (AMBAC),
5.00%, 10/1/33 1,511,985
9,000 Texas Turnpike Authority, (Central Texas Turnpike System),
(AMBAC), 0.00%, 8/15/21 3,911,580
-----------------------------------------------------------------------------------------------------------------
$ 54,531,384
-----------------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 0.3%
$ 700 Jupiter, FL, (AMBAC), 4.75%, 10/1/33 $ 688,611
-----------------------------------------------------------------------------------------------------------------
$ 688,611
-----------------------------------------------------------------------------------------------------------------
LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 1.9%
$ 1,000 New Jersey EDA, (School Facilities), 5.00%, 6/15/26 $ 1,020,530
3,340 New Jersey EDA, (School Facilities), Variable Rate,
11.995%, 6/15/28(1)(2) 3,442,872
-----------------------------------------------------------------------------------------------------------------
$ 4,463,402
-----------------------------------------------------------------------------------------------------------------
NURSING HOME -- 3.5%
$ 3,445 Ohio HFA, Retirement Rental Housing, (Encore Retirement
Partners), 6.75%, 3/1/19 $ 2,984,851
750 Okaloosa County, FL, Retirement Rental Housing, (Encore
Retirement Partners), 6.125%, 2/1/14 674,138
2,000 Orange County, FL, Health Facilities Authority, (Westminster
Community Care), 6.75%, 4/1/34 1,726,480
767 Tarrant County, TX, Health Facilities Authority,
8.00%, 9/1/25(5) 22,254
1,154 Tarrant County, TX, Health Facilities Authority,
(3927 Foundation), 10.25%, 9/1/19(5) 11,543
2,920 Wisconsin HEFA, (Wisconsin Illinois Senior Housing),
7.00%, 8/1/29 2,744,128
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$ 8,163,394
-----------------------------------------------------------------------------------------------------------------
OTHER REVENUE -- 14.2%
$ 4,000 California Statewide Communities Development Authority,
(East Valley Tourist Development Authority),
8.25%, 10/1/14 $ 4,078,760
3,000 Capital Trust Agency, FL, (Seminole Tribe Convention),
8.95%, 10/1/33 3,510,990
4,000 Capital Trust Agency, FL, (Seminole Tribe Convention),
10.00%, 10/1/33 4,904,080
$ 3,160 Golden Tobacco Securitization Corp., CA, 6.75%, 6/1/39 $ 3,161,011
2,900 Golden Tobacco Securitization Corp., CA, Variable Rate,
9.243%, 6/1/38(2)(4) 3,191,595
1,500 Mohegan Tribe Indians, CT, Gaming Authority,
(Public Improvements), 6.25%, 1/1/21 1,595,790
3,900 Puerto Rico Infrastructure Financing Authority, Variable Rate,
19.305%, 10/1/32(1)(2)(3) 5,472,792
3,300 Santa Fe, NM, (Crow Hobbs), 8.50%, 9/1/16 3,351,150
1,290 Tobacco Settlement Financing Corp., NJ, 6.75%, 6/1/39 1,289,136
3,000 Tobacco Settlement Financing Corp., NJ, Variable Rate,
12.022%, 6/1/39(2)(4) 2,993,940
-----------------------------------------------------------------------------------------------------------------
$ 33,549,244
-----------------------------------------------------------------------------------------------------------------
POOLED LOANS -- 0.4%
$ 895 Virginia Resources Authority, (Virginia Pooled Financing
Program), 4.50%, 11/1/35 $ 842,464
-----------------------------------------------------------------------------------------------------------------
$ 842,464
-----------------------------------------------------------------------------------------------------------------
SENIOR LIVING / LIFE CARE -- 2.5%
$ 1,960 Cliff House Trust, PA, (AMT), 6.625%, 6/1/27 $ 1,487,464
3,240 Logan County, CO, Industrial Development Revenue,
(TLC Care Choices, Inc.), 6.875%, 12/1/23 2,930,742
1,400 Mesquite, TX, Health Facilities Authority, (Christian
Retirement Facility), 7.625%, 2/15/28 1,466,710
-----------------------------------------------------------------------------------------------------------------
$ 5,884,916
-----------------------------------------------------------------------------------------------------------------
SPECIAL TAX REVENUE -- 5.1%
$ 3,280 Bell Mountain Ranch, CO, Metropolitan District,
6.625%, 11/15/25 $ 3,352,619
3,570 Black Hawk, CO, Business Improvement District,
6.50%, 12/1/11 3,519,842
395 Longleaf, FL, Community Development District,
6.20%, 5/1/09 381,803
1,720 Longleaf, FL, Community Development District,
6.65%, 5/1/20 1,579,493
1,150 New Jersey EDA, (Cigarette Tax), 5.50%, 6/15/24 1,171,770
2,115 New Jersey EDA, (Cigarette Tax), 5.75%, 6/15/29 2,162,461
-----------------------------------------------------------------------------------------------------------------
$ 12,167,988
-----------------------------------------------------------------------------------------------------------------
See notes to financial statements
7
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
-----------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 4.2%
$ 3,750 Kent County, MI, Airport Facility, Variable Rate,
8.01%, 1/1/25(2)(4) $ 3,836,925
6,000 Port Authority of New York and New Jersey,
5.25%, 7/15/34 6,161,580
-----------------------------------------------------------------------------------------------------------------
$ 9,998,505
-----------------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 152.0%
(IDENTIFIED COST $342,420,664) $ 359,091,083
----------------
OTHER ASSETS, LESS LIABILITIES -- 3.5% $ 8,294,444
----------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (55.5)% $ (131,082,303)
----------------
NET ASSETS APPLICABLE TO COMMON
SHARES -- 100.0% $ 236,303,224
----------------
AMBAC - AMBAC Financial Group, Inc.
AMT - Interest earned from these securities may be considered a tax preference
item for purposes of the Federal Alternative Minimum Tax.
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance, Inc.
MBIA - Municipal Bond Insurance Association
At November 30, 2004, the concentration of the Trust's investments in the
various states, determined as a percentage of net assets, is as follows:
California 13.3%
Colorado 10.5%
Illinois 13.4%
New Jersey 11.3%
Texas 20.0%
Others, representing less than 10% individually 83.5%
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, 2004, 32.3% 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 an individual financial
institution ranged from 3.7% to 14.8% of total investments.
(1) Security has been issued as a leveraged inverse floater bond. The stated
interest rate represents the rate in effect at November 30, 2004
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
2004, the aggregate value of the securities is $54,614,807 or 23.1% of the
Trust's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(4) Security has been issued as an inverse floater bond. The stated interest
rate represents the rate in effect at November 30, 2004
(5) Defaulted bond.
See notes to financial statements
8
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF NOVEMBER 30, 2004
ASSETS
Investments, at value (identified cost, $342,420,664) $ 359,091,083
Cash 1,836,333
Receivable for investments sold 90,000
Interest receivable 7,104,790
Receivable for daily variation margin on open financial futures contracts 178,125
Prepaid expenses 100,502
---------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 368,400,833
---------------------------------------------------------------------------------------------------
LIABILITIES
Payable for open swap contracts $ 901,216
Payable to affiliate for Trustees' fees 1,815
Accrued expenses 112,275
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 1,015,306
---------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES (5,240 SHARES OUTSTANDING) AT LIQUIDATION
VALUE PLUS CUMULATIVE UNPAID DIVIDENDS 131,082,303
---------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 236,303,224
---------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Common Shares, $0.01 par value, unlimited number of shares
authorized, 16,944,390 shares issued and outstanding $ 169,444
Additional paid-in capital 250,726,054
Accumulated net realized loss (computed on the basis of identified cost) (34,739,172)
Accumulated undistributed net investment income 3,738,738
Net unrealized appreciation (computed on the basis of identified cost) 16,408,160
---------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 236,303,224
---------------------------------------------------------------------------------------------------
NET ASSET VALUE PER COMMON SHARE
($236,303,224 DIVIDED BY 16,944,390 COMMON SHARES ISSUED AND OUTSTANDING) $ 13.95
---------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 2004
INVESTMENT INCOME
Interest $ 25,558,031
---------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 25,558,031
---------------------------------------------------------------------------------------------------
EXPENSES
Investment adviser fee $ 2,553,910
Administration fee 729,688
Trustees' fees and expenses 16,029
Preferred shares remarketing agent fee 328,401
Transfer and dividend disbursing agent fees 241,446
Custodian fee 159,075
Legal and accounting services 60,620
Printing and postage 25,967
Miscellaneous 68,853
---------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 4,183,989
---------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 12,207
---------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 12,207
---------------------------------------------------------------------------------------------------
NET EXPENSES $ 4,171,782
---------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 21,386,249
---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 1,802,994
Financial futures contracts (4,468,145)
---------------------------------------------------------------------------------------------------
NET REALIZED LOSS $ (2,665,151)
---------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 1,268,581
Financial futures contracts 26,405
Swap contracts (901,216)
---------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 393,770
---------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $ (2,271,381)
---------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS FROM INCOME $ (1,514,374)
---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 17,600,494
---------------------------------------------------------------------------------------------------
See notes to financial statements
9
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
NOVEMBER 30, 2004 NOVEMBER 30, 2003
----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE)
IN NET ASSETS
From operations --
Net investment income $ 21,386,249 $ 21,202,621
Net realized loss from investment
transactions and financial
futures contracts (2,665,151) (3,246,611)
Net change in unrealized appreciation
(depreciation) from investments,
financial futures contracts
and swap contracts 393,770 20,262,444
Distributions to preferred shareholders
from net investment income (1,514,374) (1,586,402)
----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 17,600,494 $ 36,632,052
----------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (20,069,386) $ (18,871,152)
----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (20,069,386) $ (18,871,152)
----------------------------------------------------------------------------------------------------------
Capital share transactions --
Reinvestment of distributions to
common shareholders $ 2,211,642 $ 2,524,723
----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS $ 2,211,642 $ 2,524,723
----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ (257,250) $ 20,285,623
----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES
At beginning of year $ 236,560,474 $ 216,274,851
----------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 236,303,224 $ 236,560,474
----------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME
INCLUDED IN NET ASSETS
APPLICABLE TO
COMMON SHARES
AT END OF YEAR $ 3,738,738 $ 4,092,361
----------------------------------------------------------------------------------------------------------
See notes to financial statements
10
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
YEAR ENDED NOVEMBER 30,
-------------------------------------------------------------
2004(1) 2003(1) 2002(1)(2) 2001(1) 2000(1)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.090 $ 13.020 $ 12.930 $ 11.950 $ 11.720
---------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.268 $ 1.269 $ 1.255 $ 1.124 $ 1.083
Net realized and unrealized gain (loss) (0.128) 1.026 0.013 0.873 0.260
Distribution to preferred shareholders from net investment income (0.090) (0.095) (0.148) (0.240) (0.328)
---------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 1.050 $ 2.200 $ 1.120 $ 1.757 $ 1.015
---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (1.190) $ (1.130) $ (1.030) $ (0.777) $ (0.785)
---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.190) $ (1.130) $ (1.030) $ (0.777) $ (0.785)
---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR (COMMON SHARES) $ 13.950 $ 14.090 $ 13.020 $ 12.930 $ 11.950
---------------------------------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF YEAR (COMMON SHARES) $ 16.150 $ 15.550 $ 14.050 $ 13.500 $ 11.125
---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 12.54% 20.02% 12.32% 28.95% 2.05%
---------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements
11
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------
2004(1) 2003(1) 2002(1)(2) 2001(1) 2000(1)
----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+
Net assets applicable to common shares, end of year (000's omitted) $ 236,303 $ 236,560 $ 216,275 $ 212,315 $ 194,676
Ratios (As a percentage of average net assets applicable to
common shares):
Expenses(4) 1.79% 1.80% 1.89% 1.88% 1.95%
Expenses after custodian fee reduction(4) 1.78% 1.80% 1.88% 1.88% 1.91%
Net investment income(4) 9.14% 9.37% 9.69% 8.79% 9.47%
Portfolio Turnover 21% 30% 14% 60% 66%
+ The ratios reported above are based on net assets applicable
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):
Expenses 1.15% 1.14% 1.17% 1.15% 1.15%
Expenses after custodian fee reduction 1.14% 1.14% 1.17% 1.15% 1.12%
Net investment income 5.86% 5.93% 6.01% 5.40% 5.56%
Senior Securities:
Total preferred shares outstanding 5,240 5,240 5,240 5,240 5,240
Asset coverage per preferred share(5) $ 70,112 $ 70,154 $ 66,291 $ 65,548 $ 62,155
Involuntary liquidation preference per preferred share(6) $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Approximate market value per preferred share(6) $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
(1) Computed using average common shares outstanding.
(2) The Trust has adopted the provisions of the revised AICPA AUDIT AND
ACCOUNTING GUIDE FOR INVESTMENT COMPANIES and began using the interest
method to amortize premiums on fixed-income securities. The effect of this
change for the year ended November 30, 2002 was to increase net investment
income per share by $0.011, decrease net realized and unrealized gains per
share by $0.011, increase the ratio of net investment income to average net
assets applicable to common shares from 9.61% to 9.69% and increase the
ratio of net investment income to average total net assets from 5.96% to
6.01%. Per share data and ratios for the periods prior to December 1, 2001
have not been restated to reflect this change in presentation.
(3) Returns are historical and are calculated by determining the percentage
change in market value with all distributions reinvested. 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 applicable to common shares
reflect the Trust's leveraged capital structure.
(5) Calculated by subtracting the Trust's total liabilities (not including the
preferred shares) from the Trust's total assets, and dividing this by the
number of preferred shares outstanding.
(6) Plus accumulated and unpaid dividends.
See notes to financial statements
12
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
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 provide 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 accounting principles generally accepted in the
United States of America.
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 and options on
futures contracts listed on commodity exchanges are valued at closing settlement
prices. Over-the-counter options on futures contracts are normally valued at the
mean between the latest bid and asked prices. Interest rate swaps are normally
valued on the basis of valuations furnished by a broker. 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 not readily
available 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 accretion of discount.
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 income, 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, 2004,
the Trust, for federal income tax purposes, had a capital loss carryover of
$34,626,951 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 ($9,497,591), November 30, 2008 ($14,623,294), November 30,
2009 ($5,266,337), November 30, 2011 ($2,541,236) and November 30, 2012
($2,698,493). 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 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.
F 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
13
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.
G INTEREST RATE SWAPS -- The Trust may enter 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 semi-annual payments at a fixed
interest rate. In exchange, the Trust receives payments based on the interest
rate 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 the end of a
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.
H USE OF ESTIMATES -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expense during the reporting period. Actual
results could differ from those estimates.
I INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers
and Trustees may be indemnified against certain liabilities and expenses arising
out of the performance of their duties to the Trust, and shareholders are
indemnified against personal liability for obligations of the Trust.
Additionally, in the normal course of business, the Trust enters into agreements
with service providers that may contain indemnification clauses. The Trust's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Trust that have not yet occurred.
J EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian
of the Trust. Pursuant to the custodian agreement, IBT receives a fee reduced by
credits which are determined based on the average daily cash balance the Trust
maintains with IBT. All 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. Effective
July 8, 2003, a special dividend period of 733 days was set on the series A
shares. The dividend rate, which matures on July 12, 2005, is 1.25%. Dividend
rates ranged from 0.45% to 1.70% for Series B Shares, during the year ended
November 30, 2004. 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 for an extended period 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 and the Investment Company Act of
1940. The Trust pays an annual fee 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 Auction Preferred Shares.
Distributions are recorded on the ex-dividend date. Distributions to preferred
shareholders are recorded daily and are payable at the end of
14
each dividend period. Each dividend payment period for the Auction Preferred
Shares is generally seven days. Effective July 8, 2003, the Series A shares set
a special dividend period of 733 days. The applicable dividend rate for the
Auction Preferred Shares on November 30, 2004 was 1.25% and 1.70%, for Series A
and Series B Shares, respectively. For the year ended November 30, 2004, the
Trust paid dividends to Auction Preferred shareholders amounting to $831,226 and
$683,148 for Series A and Series B Shares, respectively, representing an average
APS dividend rate for such period of 1.25% and 1.05%, respectively.
The Trust distinguishes between distribution 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. These differences relate primarily to the
method for amortizing premiums.
The tax character of distributions paid for the years ended November 30, 2004
and November 30, 2003 was as follows:
YEAR ENDED NOVEMBER 30,
---------------------------------
2004 2003
----------------------------------------------------------------------------
Distributions declared from:
Tax-exempt income $ 21,583,544 $ 20,455,081
Ordinary income $ 216 $ 2,473
During the year ended November 30, 2004, accumulated undistributed net
investment income was decreased by $156,112, and accumulated net realized loss
was decreased by $156,112 primarily due to differences between book and tax
accounting for amortization and accretion on debt securities. This change had no
effect on the net assets or the net asset value per share.
As of November 30, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed income $ 3,821,040
Capital loss carryforward $ (34,626,951)
Unrealized gain $ 16,295,939
Other temporary differences $ (82,302)
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,
2004, the fee was equivalent to 0.70% of the Trust's average weekly gross assets
and amounted to $2,553,910. 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, 2004, the
administrative fee amounted to $729,688.
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 $73,672,456 and $75,698,884, respectively,
for the year ended November 30, 2004.
6 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION)
The cost and unrealized appreciation (depreciation) in value of the investments
owned by the Trust at November 30, 2004, as computed for federal income tax
purposes, are as follows:
AGGREGATE COST $ 341,893,928
----------------------------------------------------------------------------
Gross unrealized appreciation $ 26,041,256
Gross unrealized depreciation (8,844,101)
----------------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 17,197,155
----------------------------------------------------------------------------
15
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,
---------------------------
2004 2003
----------------------------------------------------------------------------
Shares issued pursuant to the Trust's dividend
reinvestment plan 149,511 181,895
----------------------------------------------------------------------------
NET INCREASE 149,511 181,895
----------------------------------------------------------------------------
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 interest rate swaps 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, 2004 is as follows:
FUTURES CONTRACTS
EXPIRATION AGGREGATE NET UNREALIZED
DATE(S) CONTRACTS POSITION COST VALUE APPRECIATION
----------------------------------------------------------------------------------------------
03/05 400 U.S. Treasury Bond Short $ (44,214,520) $ (44,050,000) $ 164,520
----------------------------------------------------------------------------------------------
03/05 500 U.S. Treasury Note Short (55,849,437) (55,375,000) 474,437
----------------------------------------------------------------------------------------------
$ 638,957
----------------------------------------------------------------------------------------------
At November 30, 2004, the Trust had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
At November 30, 2004, the Trust had entered into an interest rate swap agreement
with Morgan Stanley Capital Services, Inc. whereby the Trust makes bi-annual
payments at a fixed rate equal to 5.1225% on the notional amount of $40,000,000.
In exchange, the Trust receives quarterly payments at a rate equal to the three
month USD-LIBOR on the same notional amount. The effective date of the interest
rate swap is February 7, 2005. The value of the contract, which terminates
February 7, 2015, is recorded as a payable for open swap contracts of $901,216
at November 30, 2004.
16
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE MUNICIPAL INCOME TRUST:
We have audited the accompanying statement of assets and liabilities of Eaton
Vance Municipal Income Trust (the Trust), including the portfolio of
investments, as of November 30, 2004, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. Our
procedures included confirmation of securities held as of November 30, 2004 by
correspondence with the custodian. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights, referred to
above, present fairly, in all material respects, the financial position of Eaton
Vance Municipal Income Trust as of November 30, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
respective stated periods, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
January 18, 2005
17
EATON VANCE MUNICIPAL INCOME TRUST as of November 30, 2004
FEDERAL TAX INFORMATION (UNAUDITED)
The Form 1099-DIV you receive in January 2005 will show the tax status of all
distributions paid to your account in calendar 2004. Shareholders are advised to
consult their own tax adviser with respect to the tax consequences of their
investment in the Trust. As required by the Internal Revenue Code regulations,
shareholders must be notified within 60 days of the Trust's fiscal year end
regarding exempt-interest dividends.
EXEMPT-INTEREST DIVIDENDS -- The Trust designates 100% of dividends from net
investment income as an exempt-interest dividend.
18
EATON VANCE MUNICIPAL INCOME TRUST
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the Plan) pursuant to which
shareholders automatically have dividends and capital gains distributions
reinvested in common shares (the Shares) of the Trust unless they elect
otherwise through their investment dealer. On the distribution payment date, if
the net asset value per Share is equal to or less than the market price per
Share plus estimated brokerage commissions then new Shares will be issued. The
number of Shares shall be determined by the greater of the net asset value per
Share or 95% of the market price. Otherwise, Shares generally will be purchased
on the open market by the Plan Agent. Distributions subject to income tax (if
any) are taxable whether or not shares are reinvested.
If your shares are in the name of a brokerage firm, bank, or other nominee, you
can ask the firm or nominee to participate in the Plan on your behalf. If the
nominee does not offer the Plan, you will need to request that your shares be
re-registered in your name with the Trust's transfer agent, PFPC, Inc. or you
will not be able to participate.
The Plan Agent's service fee for handling distributions will be paid by the
Trust. Each participant will be charged their pro rata share of brokerage
commissions on all open-market purchases.
Plan participants may withdraw from the Plan at any time by writing to the Plan
Agent at the address noted on the following page. If you withdraw, you will
receive shares in your name for all Shares credited to your account under the
Plan. If a participant elects by written notice to the Plan Agent to have the
Plan Agent sell part or all of his or her Shares and remit the proceeds, the
Plan Agent is authorized to deduct a $5.00 fee plus brokerage commissions from
the proceeds.
If you wish to participate in the Plan and your shares are held in your own
name, you may complete the form on the following page and deliver it to the Plan
Agent.
Any inquires regarding the Plan can be directed to the Plan Agent, PFPC, Inc.,
at 1-800-331-1710.
19
EATON VANCE MUNICIPAL INCOME TRUST
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 43027
Providence, RI 02940-3027
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, 2004, our records indicate that there are 163 registered
shareholders and approximately 2,000 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.
20
EATON VANCE MUNICIPAL INCOME TRUST
MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees of Eaton Vance Municipal Income Trust (the Trust)
are responsible for the overall management and supervision of the Trust's
affairs. The Trustees and officers of the Trust are listed below. Except as
indicated, each individual has held the office shown or other offices in the
same company for the last five years. The "noninterested Trustees" consist of
those Trustees who are not "interested persons" of the Trust, as that term is
defined under the 1940 Act. The business address of each Trustee and officer is
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used
below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc.,
"EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and
Research and "EVD" refers to Eaton Vance Distributors, Inc. EVC and EV are the
corporate parent and trustee, respectively, of EVM and BMR. EVD is the Trust's
principal underwriter and a wholly-owned subsidiary of EVM.
TERM OF NUMBER OF PORTFOLIOS
POSITION(S) OFFICE AND IN FUND COMPLEX
NAME AND WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY
DATE OF BIRTH TRUST SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
James B. Hawkes Vice President Until 2007. Chairman, President and 193 Director of EVC
11/9/41 and Trustee 3 years. Chief Executive Officer of
Trustee since BMR, EVC, EVM and EV;
1998. Director of EV; Vice
President and Director of
EVD. Trustee and/or officer
of 192 registered investment
companies in the Eaton Vance
Fund Complex. Mr. Hawkes is
an interested person because
of his positions with BMR,
EVM, EVC and EV, which are
affiliates of the Trusts.
NONINTERESTED TRUSTEE(S)
Samuel L. Hayes, III Trustee Until 2006. Jacob H. Schiff Professor of 193 Director of Tiffany &
2/23/35 3 years. Investment Banking Emeritus, Co. (specialty retailer)
Trustee since Harvard University Graduate and Telect, Inc.
1998 School of Business (telecommunication
Administration. services company)
William H. Park Trustee Until 2005. President and Chief 193 None
9/19/47 Trustee since Executive Officer, Prizm
2003. Capital Management, LLC
(investment management firm)
(since 2002). Executive Vice
President and Chief
Financial Officer, United
Asset Management Corporation
(a holding company owning
institutional investment
management firms)
(1982-2001).
Ronald A. Pearlman Trustee Until 2006. Professor of Law, Georgetown 193 None
7/10/40 Trustee since University Law Center (since
2003. 1999). Tax Partner Covington
& Burling, Washington, DC
(1991-2000).
Norton H. Reamer Trustee Until 2005. President, Chief Executive 193 None
9/21/35 3 years. Officer and a Director of
Trustee since Asset Management Finance
1998. Corp. (a specialty finance
company serving the
investment management
industry) (since October
2003). President, Unicorn
Corporation (an investment
and financial advisory
services company) (since
September 2000). Formerly,
Chairman, Hellman, Jordan
Management Co., Inc. (an
investment management
company) (2000-2003).
Formerly, Advisory Director
of Berkshire Capital
Corporation (investment
banking firm) (2002-2003).
Formerly Chairman of the
Board, United Asset
Management Corporation (a
holding company owning
institutional investment
management firms) and
Chairman, President and
Director, UAM Funds (mutual
funds) (1980-2000).
Lynn A. Stout Trustee Until 2005. Professor of Law, University 193 None
9/14/57 3 years. of California at Los Angeles
Trustee since School of Law (since July
1998. 2001). Formerly, Professor
of Law, Georgetown
University Law Center.
21
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
TERM OF
POSITION(S) OFFICE AND
NAME AND WITH THE LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH TRUSTS SERVICE DURING PAST FIVE YEARS
------------------------------------------------------------------------------------------------------------------
Thomas J. Fetter President Since 1998 Vice President of EVM and BMR. Officer of 124 registered
8/20/43 investment companies managed by EVM or BMR.
William H. Ahern, Jr. Vice President Since 2004 Vice President of EVM and BMR. Officer of 78 registered
7/28/59 investment companies managed by EVM or BMR.
Cynthia J. Clemson Vice President Since 2004 Vice President of EVM and BMR. Officer of 84 registered
3/2/63 investment companies managed by EVM or BMR.
Robert B. MacIntosh Vice President Since 1998 Vice President of EVM and BMR. Officer of 124 registered
1/22/57 investment companies managed by EVM or BMR.
Thomas M. Metzold Vice President Since 1998 Vice President of EVM and BMR. Officer of 47 registered
8/3/58 investment companies managed by EVM or BMR.
Alan R. Dynner Secretary Since 1998 Vice President, Secretary and Chief Legal Officer of BMR,
10/10/40 EVM, EVD, EV and EVC. Officer of 193 registered investment
companies managed by EVM or BMR.
James L. O'Connor Treasurer Since 1998 Vice President of BMR, EVM and EVD. Officer of 115
4/1/45 registered investment companies managed by EVM or BMR.
Paul M. O'Neil Chief
7/11/53 Compliance Officer Since 2004 Vice President of EVM and BMR. Officer of 193 registered
investment companies managed by EVM or BMR.
(1) Includes both master and feeder funds in a master-feeder structure.
In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed
Company Manual, the Fund's Annual CEO Certification certifying as to compliance
with NYSE's Corporate Governance Listing Standards was submitted to the Exchange
on April 15, 2004.
22
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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.
P.O. BOX 43027
PROVIDENCE, RI 02940-3027
(800) 331-1710
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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
151-1/05 CE-NASRC
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public
accountant who is the President and Chief Executive Officer of Prizm Capital
Management, LLC (investment management firm). Previously, he served as Executive
Vice President and Chief Financial Officer of United Asset Management
Corporation ("UAM") (a holding company owning institutional investment
management firms). Mr. Hayes is the Jacob H. Schiff Professor of Investment
Banking Emeritus of the Harvard University Graduate School of Business
Administration. Mr. Reamer is the President, Chief Executive Officer and a
Director of Asset Management Finance Corp. (a specialty finance company serving
the investment management industry) and is President of Unicorn Corporation (an
investment and financial advisory services company). Formerly, Mr. Reamer was
Chairman of Hellman, Jordan Management Co., Inc. (an investment management
company) and Advisory Director of Berkshire Capital Corporation (an investment
banking firm), Chairman of the Board of UAM and Chairman, President and Director
of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended November 30, 2003 and November 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
FISCAL YEAR ENDED 11/30/03 11/30/04
-------------------------------------------------------------------------------------------
Audit Fees $ 36,771 $ 44,846
Audit-Related Fees(1) 14,000 3,600
Tax Fees(2) 5,800 6,100
All Other Fees(3) 0 0
--------------------------------------------------
Total $ 56,571 $ 54,546
==================================================
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees and specifically include fees for the performance of certain
agreed-upon procedures relating to the registrant's auction preferred
shares.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
FISCAL YEAR ENDED 11/30/03 11/30/04
-------------------------------------------------------------------------------------------
REGISTRANT $ 19,800 $ 9,700
EATON VANCE(1) $ 479,858.37 $ 350,713.16
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. CONTROLS AND PROCEDURES
(a) It is the conclusion of the registrant's principal executive officer and
principal financial officer that the effectiveness of the registrant's current
disclosure controls and procedures (such disclosure controls and procedures
having been evaluated within 90 days of the date of this filing) provide
reasonable assurance that the information required to be disclosed by the
registrant has been recorded, processed, summarized and reported within the time
period specified in the Commission's rules and forms and that the information
required to be disclosed by the registrant has been accumulated and communicated
to the registrant's principal executive officer and principal financial officer
in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrant's internal controls over
financial reporting during the period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EATON VANCE MUNICIPAL INCOME TRUST
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: January 18, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ James L. O'Connor
---------------------
James L. O'Connor
Treasurer
Date: January 18, 2005
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: January 18, 2005