Eaton Vance California Municipal Bond Fund
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21147
Eaton Vance California Municipal Bond Fund
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110
(Address of Principal Executive Offices)
Maureen A. Gemma
Two International Place, Boston, Massachusetts 02110
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number)
September 30
Date of Fiscal Year End
September 30, 2011
Date of Reporting Period
 
 

 


 

Item 1. Reports to Stockholders

 


 

     
Eaton Vance
Municipal Bond Funds

Annual Report
September 30, 2011
 
(STOPWATCH GRAPHIC)

 
Municipal (EIM) • California (EVM) • New York (ENX)
 
 
 
(EATON VANCE INVESTMENT MANAGERS LOGO)


 

 
 
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.


 

Annual Report September 30, 2011
Eaton Vance
Municipal Bond Funds
Table of Contents
         
Management’s Discussion of Fund Performance
    2  
 
       
Performance and Fund Profile
       
 
       
Municipal Bond Fund
    4  
 
       
California Municipal Bond Fund
    5  
 
       
New York Municipal Bond Fund
    6  
 
       
Endnotes and Additional Disclosures
    7  
 
       
Financial Statements
    8  
Report of Independent Registered Public Accounting Firm
    36  
Federal Tax Information
    37  
Annual Meeting of Shareholders
    38  
Dividend Reinvestment Plan
    39  
Board of Trustees’ Contract Approval
    41  
Management and Organization
    44  
Important Notices
    47  


 

Eaton Vance
Municipal Bond Funds
September 30, 2011
Management’s Discussion of Fund Performance
 
Eaton Vance Municipal Bond Funds (the “Funds”) are closed-end funds traded on the NYSE Amex that are designed to provide current income exempt from regular federal income tax, federal alternative minimum tax and, in state-specific funds, state personal income taxes.
Economic and Market Conditions
The U.S. economic recovery began to sputter during the spring and summer of 2011, backsliding on ongoing news of the sovereign debt crisis in the euro zone, stubbornly high unemployment and a still-weak housing market at home, and rising fiscal and political uncertainty in our nation’s capital. The economic slowdown prompted the financial markets to shift from a “risk-on” to a decidedly “risk-off” stance by the close of the 12-month period ending September 30, 2011, with risk-associated assets such as stocks and commodities selling off, while Treasury bonds and other safe-haven assets rallied.
U.S. real gross domestic product (GDP) increased to an annualized rate of 2.5% in the third calendar quarter of 2011, according to an “advance” estimate released by the U.S. Bureau of Economic Analysis, up from an annualized growth rate of 1.3% for the second quarter of 2011. Both of these measures were down from previous periods, as annualized GDP growth rates for the third and fourth quarters of 2010 came in at 2.6% and 3.1%, respectively.
In the municipal bond market, despite a glut of supply as the Build America Bond program ended and some bearish market predictions that caused the market to begin selling off in late 2010, municipal bonds began to rally early in the new year and ended solidly in positive territory for the 12 months ending September 30, 2011. The Barclays Capital Municipal Bond Index (the Muni Bond Index)1—a broad measure of the performance of municipal bonds traded in the U.S.—rose 3.88% during that one-year period. This gain in the Muni Bond Index reflected a dearth of new supply during a period of slow growth in the U.S. economy. It also demonstrated the market’s renewed interest in state and local government debt, spurred in part by the absence of widespread municipal defaults, as had been forecast in late 2010.
Municipal bonds with intermediate maturities performed best during the 12 months under review, with the Barclays Capital 7 Year Municipal Bond Index1 rising 4.65%, compared with annual returns of 4.31% and 1.28%, respectively, for the Barclays Capital Long (22+) Municipal Bond Index (the Long 22+ Index)1, the Funds’ primary benchmark, and the Barclays Capital 1-3 Year U.S. Government/Credit Bond Index1.
Management Discussion
For the fiscal year ending September 30, 2011, each of the Municipal Bond Funds produced returns at net asset value (NAV) that, to a greater or lesser degree, underperformed the broad municipal bond market, as measured by the Long 22+ Index.
The Funds were hedged to various degrees using a strategy management traditionally employs to help mitigate the potential interest-rate risk associated with the Funds’ overall investment strategy. Generally speaking, the Funds’ overall strategy is to invest primarily in bonds at the longer end of the maturity spectrum in order to capture their typically higher yields and greater income payments. Management tends to hedge against the greater potential risk of volatility at the long end of the curve by using Treasury futures and interest-rate swaps to provide downside protection. For the 12-month period ending September 30, 2011, the hedging strategy was a drag on relative performance, as the ratio of municipal yields to U.S. Treasury yields of similar maturities remained relatively high. Thus, the more hedged any of the Funds was, the less well it performed.
Management holds leveraged investments in each of the Funds. The use of leverage4 has the effect of achieving additional exposure to the municipal market. Leverage has the impact of magnifying a Fund’s exposure to its underlying investments in both up and down markets. On balance during the up-and-down course of the 12-month period, the Funds’ leverage had a modestly positive impact on their relative performance versus the benchmark.
States and municipalities have seen budget difficulties over the past three fiscal years, but they also have made significant progress in addressing these budget concerns. Thus, as we look ahead, we are cautiously optimistic. However, as a slowing U.S. economy is likely to impact state tax revenues, we will continue to monitor closely the efforts of states and municipalities to address fiscal shortfalls.
See Endnotes and Additional Disclosures on page 7.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

2


 

Eaton Vance
Municipal Bond Funds
September 30, 2011
Management’s Discussion of Fund Performance (continued)
 
Fund-specific Results
Eaton Vance Municipal Bond Fund recorded positive performance at NAV for the fiscal year ending September 30, 2011, but lagged slightly behind the results of its benchmark, the Long 22+ Index. The Fund’s hedging position—an ongoing strategy that management has employed to help mitigate potential interest-rate risk in both up and down market environments—detracted from its performance versus the Long 22+ Index. On the upside, however, the Fund’s overexposure to high-quality bonds (AA-rated5 and above) contributed to its relative performance, compared to the Long 22+ Index, as higher-quality muni bonds performed well during the period.
Eaton Vance California Municipal Bond Fund also produced a positive return at NAV for the 12-month period, but it, too, underperformed the Long 22+ Index. Performance was hurt by the Fund’s overweight to zero-coupon bonds issued by California school districts, where an oversupply of bonds and state-specific credit concerns hurt prices. Positive contributions to relative performance came from the water and sewer sector and the education sector, as well as from the Fund’s overexposure to high-quality bonds.
Eaton Vance New York Municipal Bond Fund underperformed the Long 22+ Index at NAV. Security selection in hospital bonds and water and sewer bonds detracted from Fund performance compared to the Long 22+ Index. Conversely, the Fund’s overweight to high-quality education bonds and its overexposure to higher-quality bonds contributed to relative performance compared to the Long 22+ Index.
See Endnotes and Additional Disclosures on page 7.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

3


 

Eaton Vance
Municipal Bond Fund
September 30, 2011
Performance2
 
Portfolio Manager William H. Ahern, Jr., CFA
         
NYSE Amex Symbol   EIM
Inception Date   8/30/02
 
 
% Average Annual Total Returns at NAV
       
 
 
One Year
    3.89  
Five Years
    2.66  
Since Inception
    5.56  
 
 
 
% Average Annual Total Returns at market price, NYSE Amex
       
 
 
One Year
    -3.87  
Five Years
    3.23  
Since Inception
    5.37  
 
 
 
% Premium/Discount to NAV (9/30/11)
    -1.67  
 
 
% Market Yields3
       
 
 
Market Yield
    7.42  
Taxable-Equivalent Market Yield
    11.42  
 
 
 
% Leverage4
       
 
 
Residual Interest Bond (RIB)
    41.69  
                         
                    Since Inception
% Comparative Performance1   One Year   Five Years   8/30/02
 
 
Barclays Capital Long (22+) Municipal Bond Index
    4.31       4.17       5.27  
Lipper General & Insured Municipal Debt Funds (Leveraged) Average at NAV
    4.97       4.48       5.62  
Fund Profile
 
Credit Quality (% of total investments)5
 
(GRAPH)
The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.4 Absent such securities, the Fund’s credit quality (% of total investments) is as follows5:
                     
 
 
                               
AAA
    11.1     BBB     10.2  
AA
    56.9     BB     0.2  
A
    21.0     D     0.6  
 
                               
 
See Endnotes and Additional Disclosures on page 7.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

4


 

Eaton Vance
California Municipal Bond Fund
September 30, 2011
Performance2
 
Portfolio Manager Cynthia J. Clemson
         
NYSE Amex Symbol   EVM
Inception Date   8/30/02
 
 
% Average Annual Total Returns at NAV
       
 
 
One Year
    0.48  
Five Years
    1.51  
Since Inception
    4.34  
 
 
 
% Average Annual Total Returns at market price, NYSE Amex
       
 
 
One Year
    -0.43  
Five Years
    3.01  
Since Inception
    4.85  
 
 
 
% Premium/Discount to NAV (9/30/11)
    4.51  
 
 
% Market Yields3
       
 
 
Market Yield
    6.92  
Taxable-Equivalent Market Yield
    11.87  
 
 
 
% Leverage4
       
 
 
RIB
    43.62  
                         
                    Since Inception
% Comparative Performance1   One Year   Five Years   8/30/02
 
 
Barclays Capital Long (22+) Municipal Bond Index
    4.31       4.17       5.27  
Lipper California Municipal Debt Funds Average at NAV
    3.96       3.43       5.04  
Fund Profile
 
Credit Quality (% of total investments)5
 
(GRAPH)
The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.4 Absent such securities, the Fund’s credit quality (% of total investments) is as follows5:
                     
 
 
                               
AAA
    9.3     BBB     4.0  
AA
    55.3     BB     2.1  
A
    29.3              
 
                               
 
See Endnotes and Additional Disclosures on page 7.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

5


 

Eaton Vance
New York Municipal Bond Fund
September 30, 2011
Performance2
 
Portfolio Manager Craig R. Brandon, CFA
         
NYSE Amex Symbol   ENX
Inception Date   8/30/02
 
 
% Average Annual Total Returns at NAV
       
 
One Year
    3.37  
Five Years
    3.10  
Since Inception
    5.09  
 
 
% Average Annual Total Returns at market price, NYSE Amex
       
 
One Year
    2.56  
Five Years
    4.22  
Since Inception
    5.34  
 
 
% Premium/Discount to NAV (9/30/11)
    2.13  
 
 
% Market Yields3
       
 
Market Yield
    6.08  
Taxable-Equivalent Market Yield
    10.28  
 
% Leverage4
       
 
RIB
    40.82  
                         
                    Since Inception
% Comparative Performance1   One Year   Five Years   8/30/02
 
Barclays Capital Long (22+) Municipal Bond Index
    4.31       4.17       5.27  
Lipper New York Municipal Debt Funds Average at NAV
    3.52       3.80       5.32  
Fund Profile
 
Credit Quality (% of total investments)5
 
(GRAPH)
The above chart includes the ratings of securities held by special purpose vehicles established in connection with the RIB financing.4 Absent such securities, the Fund’s credit quality (% of total investments) is as follows5:
                     
 
 
                               
AAA
    15.4     BBB     9.3  
AA
    52.1     Not Rated     2.3  
A
    20.9              
 
                               
 
See Endnotes and Additional Disclosures on page 7.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

6


 

Eaton Vance
Municipal Bond Funds

September 30, 2011
Endnotes and Additional Disclosures
 
 
1. Barclays Capital Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. Barclays Capital 7 Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 6-8 years. Barclays Capital Long (22+) Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities of 22 years or more. Barclays Capital 1-3 Year U.S. Government/ Credit Bond Index measures the performance of U.S. Treasuries, government-related and investment-grade U.S. corporate securities with maturities ranging from 1-3 years. Unless otherwise stated, indices do not reflect any applicable sales charges, commissions, leverage, taxes or other expenses of investing. Lipper Average reflects the average annual total return of funds in the same Lipper classification as the Fund. It is not possible to invest directly in an index or Lipper classification.
 
2. Performance results reflect the effects of leverage.
 
3. Market yields are calculated by dividing the last regular distribution per common share in the period (annualized) by the market price. Taxable-equivalent performance is based on the highest combined federal and state income tax rates (41.70% for CA, 40.83% for NY) except for Municipal Bond Fund, which assumes a maximum 35.00% federal income tax rate. The distribution declared on September 30, 2011 and October 31, 2011 reflects a reduction of the monthly distribution for the Municipal Bond Fund. Distributions may be composed of tax-exempt income, ordinary income, net realized capital gains and return of capital. Lower tax rates would result in lower tax-equivalent performance. Actual tax rates will vary depending on your income, exemptions and deductions. Rates do not include local taxes.
 
4. Fund employs RIB financing. The leverage created by RIB investments provides an opportunity for increased income but, at the same time, creates special risks (including the likelihood of greater volatility of NAV). The cost of leverage rises and falls with changes in short-term interest rates. See “Floating Rate Notes Issued in Conjunction with Securities Held” in the notes to the financial statements for more information about RIB financing. RIB leverage represents the amount of Floating Rate Notes outstanding as of period end as a percentage of Fund net assets applicable to common shares plus Floating Rate Notes.
 
5. Ratings are based on Moody’s, S&P or Fitch, as applicable. Credit ratings are based largely on the rating agency’s investment analysis at the time of rating and the rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition. The rating assigned to a security by a rating agency does not necessarily reflect its assessment of the volatility of a security’s market value or of the liquidity of an investment in the security. If securities are rated differently by the rating agencies, the higher rating is shown.
 
  Fund profile subject to change due to active management.
The views expressed in this report are those of portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance and the Fund(s) disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The commentary may contain statements that are not historical facts, referred to as “forward looking statements”. The Fund’s actual future results may differ significantly from those stated in any forward looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund’s filings with the Securities and Exchange Commission.

7


 

 
Eaton Vance
Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments

                     
Tax-Exempt Investments — 169.2%
 
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
 
Electric Utilities — 1.3%
 
South Carolina Public Service Authority, (Santee Cooper), 5.50%, 1/1/38
  $ 7,110     $ 7,862,380      
Wyandotte County/Kansas City, KS, Unified Government Board of Public Utilities, 5.00%, 9/1/36
    3,425       3,629,610      
 
 
            $ 11,491,990      
 
 
 
 
General Obligations — 7.8%
 
Chicago Park District, IL, (Harbor Facilities), 5.25%, 1/1/37(1)
  $ 8,320     $ 9,026,701      
Delaware Valley, PA, Regional Finance Authority, 5.75%, 7/1/32
    3,000       3,170,370      
Frisco, TX, Independent School District, (PSF Guaranteed), 5.00%, 8/15/37
    6,465       7,106,910      
Georgia, 5.00%, 7/1/29
    10,000       11,519,900      
Klein, TX, Independent School District, (PSF Guaranteed), 5.00%, 2/1/36(1)
    2,000       2,189,520      
North East, TX, Independent School District, (PSF Guaranteed), 5.25%, 2/1/28
    2,000       2,473,580      
Northside, TX, Independent School District, (PSF Guaranteed), 5.00%, 6/15/35
    180       189,182      
Northside, TX, Independent School District, (PSF Guaranteed), 5.00%, 6/15/35(1)
    12,250       12,874,872      
Oregon, 5.00%, 8/1/35(1)
    6,750       7,494,120      
Oregon, 5.00%, 8/1/36
    2,000       2,218,740      
Port of Houston Authority, TX, (Harris County), 5.00%, 10/1/35(2)
    7,500       8,280,075      
 
 
            $ 66,543,970      
 
 
 
 
Hospital — 9.9%
 
California Health Facilities Financing Authority, (Cedars-Sinai Medical Center), 5.00%, 8/15/39
  $ 11,940     $ 11,824,063      
California Statewide Communities Development Authority, (Cottage Health System), 5.00%, 11/1/40
    2,500       2,460,325      
California Statewide Communities Development Authority, (John Muir Health), 5.00%, 8/15/36
    5,000       4,961,000      
California Statewide Communities Development Authority, (Kaiser Permanente), 5.25%, 3/1/45
    11,050       11,146,908      
Camden County, NJ, Improvement Authority, (Cooper Health System), 5.00%, 2/15/25
    605       581,006      
Camden County, NJ, Improvement Authority, (Cooper Health System), 5.00%, 2/15/35
    2,610       2,287,012      
Camden County, NJ, Improvement Authority, (Cooper Health System), 5.25%, 2/15/27
    1,870       1,804,868      
Camden County, NJ, Improvement Authority, (Cooper Health System), 5.75%, 2/15/34
    5,685       5,541,511      
Hawaii Department of Budget and Finance, (Hawaii Pacific Health), 5.60%, 7/1/33
    3,900       3,892,317      
Highlands County, FL, Health Facilities Authority, (Adventist Health System), 5.25%, 11/15/36
    7,190       7,339,983      
Knox County, TN, Health, Educational and Housing Facilities Board, (Covenant Health), 0.00%, 1/1/38
    8,310       1,733,965      
Knox County, TN, Health, Educational and Housing Facilities Board, (Covenant Health), 0.00%, 1/1/41
    10,000       1,730,200      
Lehigh County, PA, General Purpose Authority, (Lehigh Valley Health Network), 5.25%, 7/1/32
    8,165       8,326,095      
Michigan Hospital Finance Authority, (Henry Ford Health System), 5.00%, 11/15/38
    4,295       4,089,699      
Michigan Hospital Finance Authority, (Henry Ford Health System), 5.25%, 11/15/46
    10,000       9,753,600      
South Miami, FL, Health Facilities Authority, (Baptist Health), 5.00%, 8/15/42
    100       100,474      
South Miami, FL, Health Facilities Authority, (Baptist Health), 5.00%, 8/15/42(1)
    900       904,266      
Tarrant County, TX, Cultural Education Facilities Finance Corp., (Scott & White Healthcare), 5.25%, 8/15/40
    6,105       6,197,674      
 
 
            $ 84,674,966      
 
 
 
 
Industrial Development Revenue — 0.8%
 
St. John Baptist Parish, LA, (Marathon Oil Corp.), 5.125%, 6/1/37
  $ 7,235     $ 7,146,950      
 
 
            $ 7,146,950      
 
 
 
 
Insured – Electric Utilities — 5.9%
 
American Municipal Power-Ohio, Inc., OH, (Prairie State Energy Campus), (AGC), 5.75%, 2/15/39
  $ 5,000     $ 5,498,550      
Long Island, NY, Power Authority, (BHAC), 5.50%, 5/1/33
    1,350       1,488,294      
Mississippi Development Bank, (Municipal Energy), (XLCA), 5.00%, 3/1/41
    13,895       13,040,874      
Paducah, KY, Electric Plant Board, (AGC), 5.25%, 10/1/35
    2,735       2,911,845      
South Carolina Public Service Authority, (AGM), 5.125%, 1/1/37(1)
    18,340       18,563,564      
South Carolina Public Service Authority, (Santee Cooper), (BHAC), 5.50%, 1/1/38
    7,840       8,716,826      
 
 
            $ 50,219,953      
 
 
 

 
See Notes to Financial Statements.
8


 

 
Eaton Vance
Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – Escrowed / Prerefunded — 0.1%
 
Highlands County, FL, Health Facilities Authority, (Adventist Health System), (BHAC), Prerefunded to 11/15/16, 5.25%, 11/15/36
  $ 525     $ 636,720      
 
 
            $ 636,720      
 
 
 
 
Insured – General Obligations — 14.8%
 
Cincinnati, OH, City School District, (AGM), (FGIC), 5.25%, 12/1/30
  $ 3,750     $ 4,499,625      
Clark County, NV, (AMBAC), 2.50%, 11/1/36
    12,155       8,630,779      
Frisco, TX, Independent School District, (AGM), (PSF Guaranteed), 2.75%, 8/15/39
    10,055       7,961,549      
Frisco, TX, Independent School District, (AGM), (PSF Guaranteed), 4.00%, 8/15/40
    14,330       14,317,246      
Kane, Cook and DuPage Counties, IL, School District No. 46, (AMBAC), 0.00%, 1/1/21
    15,550       10,428,297      
Kane, Cook and DuPage Counties, IL, School District No. 46, (AMBAC), 0.00%, 1/1/22
    50,650       31,821,876      
King County, WA, Public Hospital District No. 1, (AGC), 5.00%, 12/1/37(1)
    7,000       7,225,750      
Palm Springs, CA, Unified School District, (AGC), 5.00%, 8/1/32
    8,955       9,611,043      
Port Arthur, TX, Independent School District, (AGC), 4.75%, 2/15/38
    95       98,835      
Port Arthur, TX, Independent School District, (AGC), 4.75%, 2/15/38(1)
    10,950       11,392,052      
Schaumburg, IL, (BHAC), (FGIC), 5.00%, 12/1/38(1)
    12,750       13,035,722      
Yuma and La Paz Counties, AZ, Community College District, (Arizona Western College), (NPFG), 3.75%, 7/1/31
    8,325       7,661,914      
 
 
            $ 126,684,688      
 
 
 
 
Insured – Hospital — 17.7%
 
Arizona Health Facilities Authority, (Banner Health), (BHAC), 5.375%, 1/1/32
  $ 8,250     $ 8,733,450      
California Statewide Communities Development Authority, (Sutter Health), (AGM), 5.05%, 8/15/38(1)
    11,000       11,181,390      
Centre County, PA, Hospital Authority, (Mount Nittany Medical Center), (AGC), 6.125%, 11/15/39
    3,950       4,113,451      
Centre County, PA, Hospital Authority, (Mount Nittany Medical Center), (AGC), 6.25%, 11/15/44
    1,050       1,093,166      
Colorado Health Facilities Authority, (Catholic Health), (AGM), 5.10%, 10/1/41(1)
    11,500       11,767,145      
Highlands County, FL, Health Facilities Authority, (Adventist Health System), (BHAC), 5.25%, 11/15/36(1)
    15,500       16,144,800      
Highlands County, FL, Health Facilities Authority, (Adventist Health System), (NPFG), 5.00%, 11/15/35
    3,795       3,829,231      
Illinois Finance Authority, (Children’s Memorial Hospital), (AGC), 5.25%, 8/15/47(1)
    15,000       15,282,300      
Indiana Health and Educational Facility Finance Authority, (Sisters of St. Francis Health Services), (AGM), 5.25%, 5/15/41(1)
    2,500       2,574,875      
Iowa Finance Authority, Health Facilities, (Iowa Health System), (AGC), 5.625%, 8/15/37
    2,625       2,792,895      
Maricopa County, AZ, Industrial Development Authority, (Catholic Healthcare West), (BHAC), 5.25%, 7/1/32
    1,675       1,738,365      
Maryland Health and Higher Educational Facilities Authority, (LifeBridge Health), (AGC), 4.75%, 7/1/47(1)
    19,150       18,379,595      
New Jersey Health Care Facilities Financing Authority, (Hackensack University Medical Center), (AGC), 5.25%, 1/1/36(1)
    5,250       5,452,020      
New Jersey Health Care Facilities Financing Authority, (Meridian Health Center), Series II, (AGC), 5.00%, 7/1/38
    1,655       1,695,349      
New Jersey Health Care Facilities Financing Authority, (Meridian Health Center), Series V, (AGC), 5.00%, 7/1/38
    235       240,729      
New Jersey Health Care Facilities Financing Authority, (Meridian Health Center), Series V, (AGC), 5.00%, 7/1/38(1)
    3,500       3,585,330      
New Jersey Health Care Facilities Financing Authority, (Virtua Health), (AGC), 5.50%, 7/1/38
    13,115       13,898,359      
Washington Health Care Facilities Authority, (MultiCare Health System), (AGC), 6.00%, 8/15/39
    5,795       6,325,127      
Washington Health Care Facilities Authority, (Providence Health Care), Series C, (AGM), 5.25%, 10/1/33(1)
    8,700       9,161,448      
Washington Health Care Facilities Authority, (Providence Health Care), Series D, (AGM), 5.25%, 10/1/33(1)
    12,605       13,289,703      
 
 
            $ 151,278,728      
 
 
 
 
Insured – Industrial Development Revenue — 1.1%
 
Pennsylvania Economic Development Financing Authority, (Aqua Pennsylvania, Inc. Project), (BHAC), 5.00%, 10/1/39(1)
  $ 9,000     $ 9,620,730      
 
 
            $ 9,620,730      
 
 
 

 
See Notes to Financial Statements.
9


 

 
Eaton Vance
Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – Lease Revenue / Certificates of Participation — 11.2%
 
Hudson Yards Infrastructure Corp., NY, (NPFG), 4.50%, 2/15/47
  $ 12,250     $ 11,247,337      
New Jersey Economic Development Authority, (School Facilities Construction), (AGC), 5.50%, 12/15/34
    2,910       3,138,290      
San Diego County, CA, Water Authority, Certificates of Participation, (AGM), 5.00%, 5/1/38(1)
    24,000       25,171,200      
San Jose, CA, Financing Authority, (Civic Center), (AMBAC), (BHAC), 5.00%, 6/1/37(1)
    42,750       42,938,527      
Tri-Creek Middle School Building Corp., IN, (AGM), 5.25%, 1/15/34(1)
    13,000       13,762,970      
 
 
            $ 96,258,324      
 
 
 
 
Insured – Other Revenue — 5.7%
 
Golden State Tobacco Securitization Corp., CA, (AGC), 5.00%, 6/1/45
  $ 11,910     $ 11,662,153      
Golden State Tobacco Securitization Corp., CA, (AGC), 5.00%, 6/1/45(1)
    25,875       25,336,541      
Harris County-Houston, TX, Sports Authority, (NPFG), 0.00%, 11/15/34
    16,795       3,650,393      
New York, NY, Industrial Development Agency, (Yankee Stadium), (AGC), 7.00%, 3/1/49
    6,750       7,774,313      
 
 
            $ 48,423,400      
 
 
 
 
Insured – Private Education — 3.9%
 
Massachusetts Development Finance Agency, (College of the Holy Cross), (AMBAC), 5.25%, 9/1/32
  $ 14,400     $ 17,476,416      
Miami-Dade County, FL, Educational Facilities Authority, (University of Miami), (AMBAC), (BHAC), 5.00%, 4/1/31
    7,865       8,244,093      
Washington, DC, Georgetown University, (AMBAC), 4.50%, 4/1/42
    7,795       7,775,746      
 
 
            $ 33,496,255      
 
 
 
 
Insured – Solid Waste — 0.6%
 
Palm Beach County, FL, Solid Waste Authority, (BHAC), 5.00%, 10/1/24
  $ 2,760     $ 3,148,028      
Palm Beach County, FL, Solid Waste Authority, (BHAC), 5.00%, 10/1/26
    1,575       1,766,079      
 
 
            $ 4,914,107      
 
 
 
 
Insured – Special Tax Revenue — 9.9%
 
Alabama Public School and College Authority, (AGM), 2.50%, 12/1/27
  $ 17,955     $ 15,300,892      
Houston, TX, Hotel Occupancy Tax, (AMBAC), 0.00%, 9/1/24
    18,035       8,907,847      
Jacksonville, FL, Excise Tax, (FGIC), (NPFG), 5.125%, 10/1/27
    1,175       1,212,048      
Miami-Dade County, FL, Professional Sports Franchise Facilities, (AGC), 7.00%, (0.00% until 10/1/19), 10/1/39
    15,000       10,972,950      
New York Convention Center Development Corp., Hotel Occupancy Tax, (AMBAC), 4.75%, 11/15/45
    12,680       12,479,276      
Puerto Rico Sales Tax Financing Corp., (AMBAC), 0.00%, 8/1/54
    196,275       14,088,619      
Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45
    78,410       10,521,838      
Utah Transportation Authority, Sales Tax Revenue, (AGM), 4.75%, 6/15/32(1)
    10,800       11,339,891      
 
 
            $ 84,823,361      
 
 
 
 
Insured – Student Loan — 1.1%
 
Maine Educational Loan Authority, (AGC), 5.625%, 12/1/27
  $ 8,755     $ 9,455,050      
 
 
            $ 9,455,050      
 
 
 
 
Insured – Transportation — 23.5%
 
Chicago, IL, (O’Hare International Airport), (AGM), 4.75%, 1/1/34(1)
  $ 21,640     $ 21,936,466      
Clark County, NV, (Las Vegas-McCarran International Airport), (AGM), 5.25%, 7/1/39
    8,080       8,501,857      
Director of the State of Nevada Department of Business and Industry, (Las Vegas Monorail), (AMBAC), 0.00%, 1/1/23(3)
    10,070       1,318,566      
Director of the State of Nevada Department of Business and Industry, (Las Vegas Monorail), (AMBAC), 0.00%, 1/1/28(3)
    3,100       294,779      
Director of the State of Nevada Department of Business and Industry, (Las Vegas Monorail), (AMBAC), 5.375%, 1/1/40(3)
    15,000       3,450,750      
E-470 Public Highway Authority, CO, (NPFG), 0.00%, 9/1/21
    10,200       5,671,710      
E-470 Public Highway Authority, CO, (NPFG), 0.00%, 9/1/39
    25,000       3,454,500      
Harris County, TX, Toll Road, Senior Lien, (BHAC), (NPFG), 5.00%, 8/15/33(1)
    7,800       8,239,998      
Manchester, NH, (Manchester-Boston Regional Airport), (AGM), 5.125%, 1/1/30
    6,710       7,040,669      
Maryland Transportation Authority, (AGM), 5.00%, 7/1/35(1)
    20,995       22,605,106      
Maryland Transportation Authority, (AGM), 5.00%, 7/1/36(1)
    14,000       15,064,980      
Metropolitan Washington, DC, Airports Authority, (BHAC), 5.00%, 10/1/29
    1,785       1,913,163      

 
See Notes to Financial Statements.
10


 

 
Eaton Vance
Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – Transportation (continued)
 
                     
Minneapolis and St. Paul, MN, Metropolitan Airports Commission, (FGIC), (NPFG), 4.50%, 1/1/32
  $ 10,555     $ 10,464,333      
New Jersey Transportation Trust Fund Authority, (AGC), 5.50%, 12/15/38
    11,700       12,678,354      
North Carolina Turnpike Authority, (Triangle Expressway System), (AGC), 5.50%, 1/1/29
    1,015       1,102,310      
North Carolina Turnpike Authority, (Triangle Expressway System), (AGC), 5.75%, 1/1/39
    1,160       1,260,375      
North Texas Tollway Authority, (BHAC), 5.75%, 1/1/48(1)
    20,000       21,325,400      
Port Authority of New York and New Jersey, (AGM), 5.00%, 8/15/26(1)
    10,000       10,792,700      
Port Palm Beach District, FL, (XLCA), 0.00%, 9/1/24
    1,605       670,216      
Port Palm Beach District, FL, (XLCA), 0.00%, 9/1/25
    1,950       745,543      
Port Palm Beach District, FL, (XLCA), 0.00%, 9/1/26
    1,000       352,520      
San Joaquin Hills, CA, Transportation Corridor Agency, (Toll Road Bonds), (NPFG), 0.00%, 1/15/25
    26,215       8,917,032      
Texas Turnpike Authority, (AMBAC), 0.00%, 8/15/20
    24,510       16,822,438      
Texas Turnpike Authority, (Central Texas Turnpike System), (AMBAC), 5.00%, 8/15/42
    17,185       16,492,788      
 
 
            $ 201,116,553      
 
 
 
 
Insured – Water and Sewer — 13.9%
 
Austin, TX, Water and Wastewater, (AGM), (BHAC), 5.00%, 11/15/33(1)
  $ 2,000     $ 2,109,780      
Birmingham, AL, Waterworks and Sewer Board, (AMBAC), (BHAC), 4.50%, 1/1/39
    465       463,884      
Bossier City, LA, Utilities Revenue, (BHAC), 5.25%, 10/1/26
    3,185       3,535,828      
Bossier City, LA, Utilities Revenue, (BHAC), 5.25%, 10/1/27
    1,985       2,190,666      
Bossier City, LA, Utilities Revenue, (BHAC), 5.50%, 10/1/38
    3,170       3,418,782      
Chicago, IL, Wastewater Transmission Revenue, (BHAC), 5.50%, 1/1/38
    3,060       3,275,699      
Chicago, IL, Wastewater Transmission Revenue, (NPFG), 0.00%, 1/1/23
    13,670       7,915,477      
DeKalb County, GA, Water and Sewer, (AGM), 5.25%, 10/1/32(1)
    10,000       10,840,300      
District of Columbia Water and Sewer Authority, (AGC), 5.00%, 10/1/34(1)
    8,500       8,980,165      
Houston, TX, Utility System, (AGM), (BHAC), 5.00%, 11/15/33(1)
    27,570       29,137,628      
Massachusetts Water Resources Authority, (AGM), 5.25%, 8/1/32
    5,540       6,747,498      
New York, NY, Municipal Water Finance Authority, (BHAC), 5.75%, 6/15/40(1)
    9,500       10,807,200      
Seattle, WA, Drain and Wastewater Revenue, (AGM), 5.00%, 6/1/38(1)
    27,670       29,533,019      
 
 
            $ 118,955,926      
 
 
 
 
Insured – Water Revenue — 10.2%
 
Los Angeles, CA, Department of Water and Power, (BHAC), (FGIC), 5.00%, 7/1/43(1)
  $ 53,500     $ 53,844,005      
Massachusetts Water Resources Authority, (AGM), 5.25%, 8/1/38
    1,070       1,320,230      
Massachusetts Water Resources Authority, (AMBAC), (BHAC), 4.00%, 8/1/40
    18,865       18,625,414      
Metropolitan Water District, CA, Water and Sewer Systems, (BHAC), (FGIC), 5.00%, 10/1/36(1)
    5,750       5,886,850      
San Luis Obispo County, CA, (Nacimiento Water Project), (NPFG), 4.50%, 9/1/40
    7,375       7,228,533      
 
 
            $ 86,905,032      
 
 
 
 
Other Revenue — 2.9%
 
Main Street Natural Gas, Inc., GA, Gas Project Revenue, 5.50%, 9/15/27
  $ 2,875     $ 2,804,821      
New York, NY, Transitional Finance Authority, Building Aid Revenue, 5.00%, 7/15/36(1)
    10,750       11,545,608      
Oregon Department of Administrative Services, Lottery Revenue, 5.25%, 4/1/30
    9,200       10,544,028      
 
 
            $ 24,894,457      
 
 
 
 
Private Education — 12.2%
 
California Educational Facilities Authority, (University of Southern California), 5.25%, 10/1/38
  $ 50     $ 54,888      
California Educational Facilities Authority, (University of Southern California), 5.25%, 10/1/38(1)
    9,750       10,703,160      
Connecticut Health and Educational Facilities Authority, (Wesleyan University), 5.00%, 7/1/39(1)
    14,700       15,950,970      
Houston, TX, Higher Education Finance Corp., (William Marsh Rice University), 5.00%, 5/15/35(1)
    15,000       16,457,100      
Massachusetts Health and Educational Facilities Authority, (Boston College), 5.50%, 6/1/27
    5,810       7,278,303      
Massachusetts Health and Educational Facilities Authority, (Boston College), 5.50%, 6/1/30
    8,325       10,325,414      
Massachusetts Health and Educational Facilities Authority, (Harvard University), 5.00%, 10/1/38(1)
    2,000       2,164,760      
Massachusetts Health and Educational Facilities Authority, (Harvard University), 5.50%, 11/15/36(4)
    8,790       10,090,305      

 
See Notes to Financial Statements.
11


 

 
Eaton Vance
Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Private Education (continued)
 
                     
New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/40
  $ 40     $ 43,349      
New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/40(1)
    15,300       16,580,763      
North Carolina Capital Facilities Finance Agency, (Duke University), 5.00%, 10/1/38(1)
    13,500       14,746,860      
 
 
            $ 104,395,872      
 
 
 
 
Public Education — 1.2%
 
Tennessee School Bond Authority, 5.50%, 5/1/38
  $ 5,000     $ 5,572,600      
University of California, 5.25%, 5/15/39
    4,450       4,865,763      
 
 
            $ 10,438,363      
 
 
 
 
Senior Living / Life Care — 0.1%
 
Maryland Health and Higher Educational Facilities Authority, (Charlestown Community, Inc.), 6.125%, 1/1/30
  $ 1,175     $ 1,257,920      
 
 
            $ 1,257,920      
 
 
 
 
Transportation — 8.8%
 
Delaware River Port Authority of Pennsylvania and New Jersey, 5.00%, 1/1/35
  $ 8,275     $ 8,717,382      
Los Angeles, CA, Department of Airports, (Los Angeles International Airport), 5.25%, 5/15/28
    3,285       3,626,016      
Metropolitan Transportation Authority, NY, 5.25%, 11/15/38
    4,640       4,957,237      
Metropolitan Transportation Authority, NY, 5.25%, 11/15/40
    6,500       6,908,720      
Miami-Dade County, FL, (Miami International Airport), 5.00%, 10/1/41
    14,395       14,493,606      
New Jersey Transportation Trust Fund Authority, 5.00%, 12/15/24
    10,000       11,146,200      
Orlando-Orange County, FL, Expressway Authority, 5.00%, 7/1/35
    2,915       3,078,677      
Orlando-Orange County, FL, Expressway Authority, 5.00%, 7/1/40
    2,590       2,727,684      
Pennsylvania Turnpike Commission, 6.00%, (0.00% until 12/1/15), 12/1/34
    5,000       4,082,250      
Port Authority of New York and New Jersey, 4.75%, 7/15/31
    4,300       4,551,507      
Port Authority of New York and New Jersey, 5.00%, 7/15/39
    5,000       5,384,550      
Triborough Bridge and Tunnel Authority, NY, 5.00%, 11/15/33
    5,000       5,343,750      
 
 
            $ 75,017,579      
 
 
 
 
Water and Sewer — 2.6%
 
California Department of Water Resources, (Central Valley Project), 5.25%, 12/1/35(1)
  $ 10,000     $ 11,257,600      
Charleston, SC, Waterworks and Sewer Revenue, 5.00%, 1/1/35
    2,735       3,048,732      
Marco Island, FL, Utility System, 5.00%, 10/1/34
    1,445       1,517,091      
Marco Island, FL, Utility System, 5.00%, 10/1/40
    6,325       6,621,389      
 
 
            $ 22,444,812      
 
 
 
 
Water Revenue — 2.0%
 
King County, WA, Sewer Revenue, 5.00%, 1/1/34(1)
  $ 10,000     $ 10,826,800      
Portland, OR, Water System, 5.00%, 5/1/36
    5,385       5,975,304      
 
 
            $ 16,802,104      
 
 
     
Total Tax-Exempt Investments — 169.2%
   
(identified cost $1,421,021,534)
  $ 1,447,897,810      
 
 
             
Other Assets, Less Liabilities — (69.2)%
  $ (592,193,309 )    
 
 
             
Net Assets — 100.0%
  $ 855,704,501      
 
 
 
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
 
     
AGC
 
- Assured Guaranty Corp.
AGM
 
- Assured Guaranty Municipal Corp.
AMBAC
 
- AMBAC Financial Group, Inc.
BHAC
 
- Berkshire Hathaway Assurance Corp.
FGIC
 
- Financial Guaranty Insurance Company
NPFG
 
- National Public Finance Guaranty Corp.
PSF
 
- Permanent School Fund
XLCA
 
- XL Capital Assurance, Inc.
 
At September 30, 2011, the concentration of the Fund’s investments in the various states, determined as a percentage of total investments is as follows:
 
         
California
    18.1%  
Texas
    13.6%  
Others, representing less than 10% individually
    68.3%  
 
The Fund 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 September 30, 2011, 70.6% of total 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 1.0% to 22.4% of total investments.
 
(1) Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).
(2) Security (or a portion thereof) has been pledged as collateral for open swap contracts. The aggregate value of such collateral is $2,279,781.
(3) Defaulted bond.
(4) Security (or a portion thereof) has been pledged to cover margin requirements on open financial futures contracts.

 
See Notes to Financial Statements.
12


 

 
Eaton Vance
California Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments

 
 
                     
Tax-Exempt Investments — 175.1%
 
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
 
Electric Utilities — 3.1%
 
Puerto Rico Electric Power Authority, 5.25%, 7/1/29
  $ 3,905     $ 3,991,261      
Southern California Public Power Authority, (Tieton Hydropower), 5.00%, 7/1/35
    1,470       1,550,336      
Vernon, Electric System Revenue, 5.125%, 8/1/21
    2,375       2,387,777      
 
 
            $ 7,929,374      
 
 
 
 
General Obligations — 8.7%
 
California, 5.50%, 11/1/35
  $ 4,600     $ 4,941,550      
Palo Alto, (Election of 2008), 5.00%, 8/1/40(1)
    7,020       7,666,191      
San Diego Community College District, (Election of 2002), 5.00%, 8/1/32
    1,375       1,496,921      
San Diego Community College District, (Election of 2006), 5.00%, 8/1/31
    2,545       2,779,369      
San Francisco Bay Area Rapid Transit District, (Election of 2004), 5.00%, 8/1/35(2)
    5,000       5,326,000      
 
 
            $ 22,210,031      
 
 
 
 
Hospital — 9.9%
 
California Health Facilities Financing Authority, (Catholic Healthcare West), 5.25%, 7/1/23
  $ 2,000     $ 2,066,800      
California Health Facilities Financing Authority, (Cedars-Sinai Medical Center), 5.00%, 8/15/39
    4,745       4,698,926      
California Statewide Communities Development Authority, (Cottage Health System), 5.00%, 11/1/40
    2,200       2,165,086      
California Statewide Communities Development Authority, (John Muir Health), 5.00%, 8/15/34
    2,330       2,331,351      
California Statewide Communities Development Authority, (Kaiser Permanente), 5.25%, 3/1/45
    3,850       3,883,765      
Torrance Hospital, (Torrance Memorial Medical Center), 5.50%, 6/1/31
    3,950       3,964,220      
Washington Township Health Care District, 5.00%, 7/1/32
    3,165       3,167,121      
Washington Township Health Care District, 5.25%, 7/1/29
    3,005       3,005,721      
 
 
            $ 25,282,990      
 
 
 
 
Insured – Electric Utilities — 14.9%
 
Anaheim Public Financing Authority, (Electric System District), (BHAC), (NPFG), 4.50%, 10/1/32(1)
  $ 20,000     $ 20,395,400      
Glendale Electric, (AGC), 5.00%, 2/1/31
    2,240       2,375,094      
Los Angeles Department of Water and Power, Electric Revenue, (AMBAC), (BHAC), 5.00%, 7/1/26(1)
    6,750       7,267,590      
Northern California Power Agency, (Hydroelectric), (AGC), 5.00%, 7/1/24
    2,000       2,191,520      
Sacramento Municipal Utility District, (AGM), 5.00%, 8/15/27
    1,000       1,072,900      
Sacramento Municipal Utility District, (AMBAC), (BHAC), 5.25%, 7/1/24
    4,000       4,716,720      
 
 
            $ 38,019,224      
 
 
 
 
Insured – Escrowed / Prerefunded — 9.1%
 
California Department of Water Resources, (Central Valley Project), (BHAC), (FGIC), Prerefunded to 12/1/12, 5.00%, 12/1/29(1)
  $ 2,105     $ 2,222,248      
California Infrastructure & Economic Development Bank, (Bay Area Toll Bridges), (AMBAC), Prerefunded to 1/1/28, 5.00%, 7/1/36(3)
    3,090       3,873,377      
Sacramento County Airport System, (AGM), Prerefunded to 7/1/12, 5.00%, 7/1/27(1)
    13,940       14,444,627      
Ventura County, Community College District, (NPFG), Prerefunded to 8/1/12, 5.00%, 8/1/27
    2,650       2,782,606      
 
 
            $ 23,322,858      
 
 
 
 
Insured – General Obligations — 19.6%
 
Antelope Valley Community College District, (Election of 2004), (NPFG), 5.25%, 8/1/39
  $ 4,260     $ 4,445,438      
Burbank Unified School District, (FGIC), (NPFG), 0.00%, 8/1/21
    4,135       2,690,562      
Chabot – Las Positas, Community College District, (AMBAC), 0.00%, 8/1/32
    10,000       2,840,300      
Chabot – Las Positas, Community College District, (AMBAC), 0.00%, 8/1/37
    9,500       1,970,490      
Coast Community College District, (Election of 2002), (AGM), 0.00%, 8/1/34
    23,150       5,885,424      
El Camino Hospital District, (NPFG), 4.45%, 8/1/36
    2,385       2,369,617      
Escondido, (Election of 2004), (NPFG), 4.75%, 9/1/36
    5,840       5,810,216      
Palm Springs Unified School District, (Election of 2008), (AGC), 5.00%, 8/1/33
    4,500       4,810,860      
San Diego Unified School District, (FGIC), (NPFG), 0.00%, 7/1/22
    2,300       1,396,399      
San Diego Unified School District, (FGIC), (NPFG), 0.00%, 7/1/23
    5,000       2,801,550      
San Juan Unified School District, (AGM), 0.00%, 8/1/21
    5,630       3,593,516      
San Mateo County, Community College District, (FGIC), (NPFG), 0.00%, 9/1/22
    4,840       3,045,425      
San Mateo County, Community College District, (FGIC), (NPFG), 0.00%, 9/1/23
    4,365       2,567,537      

 
See Notes to Financial Statements.
13


 

 
Eaton Vance
California Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

 
 
                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – General Obligations (continued)
 
                     
San Mateo County, Community College District, (FGIC), (NPFG), 0.00%, 9/1/25
  $ 3,955     $ 2,013,886      
San Mateo Union High School District, (FGIC), (NPFG), 0.00%, 9/1/21
    5,240       3,394,524      
Ventura County, Community College District, (NPFG), 5.00%, 8/1/27
    350       362,877      
 
 
            $ 49,998,621      
 
 
 
 
Insured – Hospital — 14.8%
 
California Health Facilities Financing Authority, (Cedars-Sinai Medical Center), (BHAC), 5.00%, 11/15/34
  $ 2,205     $ 2,253,885      
California Health Facilities Financing Authority, (Sutter Health), (BHAC), (NPFG), 5.00%, 8/15/38
    4,550       4,551,592      
California Health Facilities Financing Authority, (Sutter Health), (BHAC), (NPFG), 5.00%, 8/15/38(1)
    14,945       14,950,218      
California Statewide Communities Development Authority, (Kaiser Permanente), (BHAC), 5.00%, 4/1/31(1)
    10,000       10,312,600      
California Statewide Communities Development Authority, (Kaiser Permanente), (BHAC), 5.00%, 3/1/41(1)
    3,500       3,547,600      
California Statewide Communities Development Authority, (Sutter Health), (AMBAC), (BHAC), 5.00%, 11/15/38(1)
    2,000       2,043,620      
 
 
            $ 37,659,515      
 
 
 
 
Insured – Lease Revenue / Certificates of Participation — 15.4%
 
California Public Works Board, (California Community College), (FGIC), (NPFG), 4.00%, 10/1/30
  $ 10,160     $ 8,771,128      
Puerto Rico Public Finance Corp., (AMBAC), Escrowed to Maturity, 5.50%, 8/1/27
    3,885       5,041,836      
San Diego County Water Authority, Certificates of Participation, (AGM), 5.00%, 5/1/38(1)
    10,000       10,488,000      
San Jose Financing Authority, (Civic Center), (AMBAC), (BHAC), 5.00%, 6/1/37
    1,000       1,004,410      
San Jose Financing Authority, (Civic Center), (AMBAC), (BHAC), 5.00%, 6/1/37(1)
    14,000       14,061,740      
 
 
            $ 39,367,114      
 
 
 
 
Insured – Other Revenue — 3.0%
 
Golden State Tobacco Securitization Corp., (AGC), 5.00%, 6/1/45
  $ 7,800     $ 7,637,682      
 
 
            $ 7,637,682      
 
 
 
 
Insured – Private Education — 0.4%
 
California Educational Facilities Authority, (Pepperdine University), (FGIC), (NPFG), 5.00%, 9/1/33
  $ 1,135     $ 1,142,911      
 
 
            $ 1,142,911      
 
 
 
 
Insured – Public Education — 11.5%
 
California State University, (AGM), (BHAC), 5.00%, 11/1/39(1)
  $ 8,250     $ 8,580,247      
University of California, (AGM), 4.50%, 5/15/26(1)
    3,095       3,180,020      
University of California, (AGM), 4.50%, 5/15/28(1)
    6,690       6,783,125      
University of California, (BHAC), (FGIC), 4.75%, 5/15/37(1)
    10,750       10,885,665      
 
 
            $ 29,429,057      
 
 
 
 
Insured – Special Tax Revenue — 16.5%
 
Ceres, Redevelopment Agency Tax, (AMBAC), 4.00%, 11/1/36
  $ 7,765     $ 5,866,302      
Hesperia Public Financing Authority, (Redevelopment and Housing Projects), (XLCA), 5.00%, 9/1/31
    595       429,310      
Hesperia Public Financing Authority, (Redevelopment and Housing Projects), (XLCA), 5.00%, 9/1/37
    7,240       4,903,290      
Pomona, Public Financing Authority, (NPFG), 5.00%, 2/1/33
    5,940       5,315,350      
Puerto Rico Sales Tax Financing Corp., (AMBAC), 0.00%, 8/1/54
    59,440       4,266,603      
Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45
    25,860       3,470,153      
San Francisco Bay Area Rapid Transportation District, Sales Tax Revenue, (AGM), 4.25%, 7/1/36(2)
    6,080       5,956,455      
San Jose Redevelopment Agency, (Merged Area Redevelopment Project), (XLCA), 4.25%, 8/1/36
    5,585       3,987,076      
Santa Clara Valley Transportation Authority, Sales Tax Revenue, (AMBAC), 5.00%, 4/1/32(1)
    7,500       7,895,550      
 
 
            $ 42,090,089      
 
 
 
 
Insured – Transportation — 1.8%
 
San Joaquin Hills, Transportation Corridor Agency, (NPFG), 0.00%, 1/15/30
  $ 3,445     $ 754,111      
San Jose, Airport Revenue, (AMBAC), 5.00%, 3/1/33
    1,885       1,896,913      
San Jose, Airport Revenue, (AMBAC), 5.00%, 3/1/37
    2,040       2,048,078      
 
 
            $ 4,699,102      
 
 
 
 
Insured – Water Revenue — 23.6%
 
California Department of Water Resources, (Central Valley Project), (BHAC), (FGIC), 5.00%, 12/1/29(1)
  $ 5,895     $ 6,126,732      
Calleguas Las Virgines Public Financing Authority, (Municipal Water District), (BHAC), (FGIC), 4.75%, 7/1/37(1)
    7,000       7,186,690      
Contra Costa, Water District, (AGM), 4.50%, 10/1/31(1)
    5,500       5,501,100      
East Bay Municipal Utility District, Water System Revenue, (AGM), (FGIC), 5.00%, 6/1/32
    345       368,550      

 
See Notes to Financial Statements.
14


 

 
Eaton Vance
California Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

 
 
                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – Water Revenue (continued)
 
                     
East Bay Municipal Utility District, Water System Revenue, (FGIC), (NPFG), 5.00%, 6/1/32(1)
  $ 6,500     $ 6,943,690      
Los Angeles Department of Water and Power, (BHAC), (FGIC), 5.00%, 7/1/43(1)
    7,750       7,799,833      
Metropolitan Water District Water and Sewer Systems, (BHAC), (FGIC), 5.00%, 10/1/36(1)
    10,000       10,238,000      
Riverside, Water Revenue, (AGM), 5.00%, 10/1/38
    1,595       1,680,125      
San Luis Obispo County, (Nacimiento Water Project), (BHAC), (NPFG), 5.00%, 9/1/38
    5,000       5,254,350      
San Luis Obispo County, (Nacimiento Water Project), (NPFG), 4.50%, 9/1/40
    5,760       5,645,606      
Santa Clara Valley Water District, (AGM), 3.75%, 6/1/28
    3,455       3,402,622      
 
 
            $ 60,147,298      
 
 
 
 
Private Education — 15.1%
 
California Educational Facilities Authority, (California Institute of Technology), 5.00%, 11/1/39
  $ 290     $ 317,936      
California Educational Facilities Authority, (California Institute of Technology), 5.00%, 11/1/39(1)
    10,000       10,963,300      
California Educational Facilities Authority, (Claremont McKenna College), 5.00%, 1/1/27
    2,680       2,892,149      
California Educational Facilities Authority, (Harvey Mudd College), 5.25%, 12/1/31
    550       590,529      
California Educational Facilities Authority, (Harvey Mudd College), 5.25%, 12/1/36
    940       997,359      
California Educational Facilities Authority, (Loyola Marymount University), 5.00%, 10/1/30
    1,375       1,414,724      
California Educational Facilities Authority, (Santa Clara University), 5.00%, 2/1/29
    3,630       3,934,521      
California Educational Facilities Authority, (University of San Francisco), 6.125%, 10/1/36
    650       731,256      
California Educational Facilities Authority, (University of Southern California), 5.25%, 10/1/39
    6,200       6,802,144      
California Municipal Finance Authority, (University of San Diego), 5.00%, 10/1/31(4)
    1,175       1,220,461      
California Municipal Finance Authority, (University of San Diego), 5.00%, 10/1/35(4)
    800       821,872      
California Municipal Finance Authority, (University of San Diego), 5.25%, 10/1/26(4)
    2,270       2,471,758      
California Municipal Finance Authority, (University of San Diego), 5.25%, 10/1/27(4)
    2,395       2,577,379      
California Municipal Finance Authority, (University of San Diego), 5.25%, 10/1/28(4)
    2,520       2,699,197      
 
 
            $ 38,434,585      
 
 
 
 
Transportation — 7.7%
 
Bay Area Toll Authority, Toll Bridge Revenue, (San Francisco Bay Area), 5.25%, 4/1/29
  $ 140     $ 153,000      
Bay Area Toll Authority, Toll Bridge Revenue, (San Francisco Bay Area), 5.25%, 4/1/29(1)
    6,500       7,103,590      
Long Beach, Harbor Revenue, 5.00%, 5/15/27
    1,960       2,174,855      
Los Angeles Department of Airports, (Los Angeles International Airport), 5.00%, 5/15/35(1)
    7,500       8,005,575      
San Francisco City and County Airport Commission, (San Francisco International Airport), 5.00%, 5/1/35
    2,190       2,288,616      
 
 
            $ 19,725,636      
 
 
     
Total Tax-Exempt Investments — 175.1%
   
(identified cost $443,162,170)
  $ 447,096,087      
 
 
             
Other Assets, Less Liabilities — (75.1)%
  $ (191,801,767 )    
 
 
             
Net Assets — 100.0%
  $ 255,294,320      
 
 
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
 
     
AGC
 
- Assured Guaranty Corp.
AGM
 
- Assured Guaranty Municipal Corp.
AMBAC
 
- AMBAC Financial Group, Inc.
BHAC
 
- Berkshire Hathaway Assurance Corp.
FGIC
 
- Financial Guaranty Insurance Company
NPFG
 
- National Public Finance Guaranty Corp.
XLCA
 
- XL Capital Assurance, Inc.
 
The Fund invests primarily in debt securities issued by California 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 September 30, 2011, 74.6% of total 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 2.1% to 32.1% of total investments.
 
(1) Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).
 
(2) Security (or a portion thereof) has been segregated to cover payable for when-issued securities.
 
(3) Security (or a portion thereof) has been pledged to cover margin requirements on open financial futures contracts.
 
(4) When-issued security.

 
See Notes to Financial Statements.
15


 

 
Eaton Vance
New York Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments

 
 
                     
Tax-Exempt Investments — 165.4%
 
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
 
Bond Bank — 5.0%
 
New York Environmental Facilities Corp., 5.00%, 10/15/39(1)
  $ 3,360     $ 3,650,405      
New York Environmental Facilities Corp., Clean Water and Drinking Water, (Municipal Water Finance), 5.00%, 10/15/35
    50       54,404      
New York Environmental Facilities Corp., Clean Water and Drinking Water, (Municipal Water Finance), 5.00%, 10/15/35(2)
    6,100       6,637,349      
 
 
            $ 10,342,158      
 
 
 
 
Escrowed / Prerefunded — 0.2%
 
New York, Prerefunded to 1/15/13, 5.25%, 1/15/33
  $ 300     $ 319,089      
 
 
            $ 319,089      
 
 
 
 
General Obligations — 7.4%
 
Long Beach City School District, 4.50%, 5/1/26
  $ 4,715     $ 5,027,699      
New York, 5.00%, 2/15/34(2)
    7,250       8,017,847      
New York, 5.25%, 1/15/33
    200       203,066      
New York, 5.25%, 1/15/33(2)
    1,250       1,269,163      
Peekskill, 5.00%, 6/1/35
    465       499,136      
Peekskill, 5.00%, 6/1/36
    490       524,775      
 
 
            $ 15,541,686      
 
 
 
 
Hospital — 2.0%
 
New York Dormitory Authority, (Highland Hospital of Rochester), 5.00%, 7/1/26
  $ 620     $ 646,052      
New York Dormitory Authority, (Highland Hospital of Rochester), 5.20%, 7/1/32
    820       847,593      
New York Dormitory Authority, (Lenox Hill Hospital), 5.50%, 7/1/30
    640       648,359      
New York Dormitory Authority, (North Shore-Long Island Jewish Obligated Group), 5.00%, 5/1/26
    2,055       2,104,669      
 
 
            $ 4,246,673      
 
 
 
 
Housing — 1.2%
 
New York Housing Development Corp., 4.95%, 11/1/39
  $ 2,500     $ 2,558,950      
 
 
            $ 2,558,950      
 
 
 
 
Industrial Development Revenue — 1.0%
 
New York Liberty Development Corp., (Goldman Sachs Group, Inc.), 5.25%, 10/1/35
  $ 500     $ 515,230      
New York Liberty Development Corp., (Goldman Sachs Group, Inc.), 5.50%, 10/1/37
    1,440       1,533,240      
 
 
            $ 2,048,470      
 
 
 
 
Insured – Electric Utilities — 6.7%
 
Long Island Power Authority, Electric System Revenue, (BHAC), 5.75%, 4/1/33
  $ 5,000     $ 5,612,250      
Long Island Power Authority, Electric System Revenue, (NPFG), 4.25%, 5/1/33
    1,060       1,019,222      
New York Power Authority, (BHAC), (NPFG), 4.50%, 11/15/47(2)
    7,210       7,357,444      
 
 
            $ 13,988,916      
 
 
 
 
Insured – Escrowed / Prerefunded — 3.4%
 
New York Dormitory Authority, (Memorial Sloan-Kettering Cancer Center), (NPFG), Escrowed to Maturity, 0.00%, 7/1/26
  $ 1,645     $ 1,047,174      
New York Dormitory Authority, (Memorial Sloan-Kettering Cancer Center), (NPFG), Escrowed to Maturity, 0.00%, 7/1/27
    2,485       1,505,910      
New York Dormitory Authority, (Memorial Sloan-Kettering Cancer Center), (NPFG), Escrowed to Maturity, 0.00%, 7/1/30
    8,615       4,440,860      
 
 
            $ 6,993,944      
 
 
 
 
Insured – General Obligations — 12.0%
 
Brentwood Union Free School District, (AGC), 4.75%, 11/15/23
  $ 2,290     $ 2,633,981      
Brentwood Union Free School District, (AGC), 5.00%, 11/15/24
    2,390       2,771,157      
East Northport Fire District, (AGC), 4.50%, 11/1/20
    200       235,932      
East Northport Fire District, (AGC), 4.50%, 11/1/21
    200       233,670      
East Northport Fire District, (AGC), 4.50%, 11/1/22
    200       232,090      
East Northport Fire District, (AGC), 4.50%, 11/1/23
    200       229,504      
Eastchester Union Free School District, (AGM), 3.50%, 6/15/20
    245       263,554      
Eastchester Union Free School District, (AGM), 3.75%, 6/15/21
    255       274,714      
Eastchester Union Free School District, (AGM), 4.00%, 6/15/23
    175       188,389      
Freeport, (AGC), 5.00%, 10/15/20
    185       220,881      
Freeport, (AGC), 5.00%, 10/15/21
    195       230,129      
Freeport Union Free School District, (AGC), 4.00%, 4/1/23
    750       807,698      
Freeport Union Free School District, (AGC), 4.00%, 4/1/24
    870       929,169      
Hauppauge Union Free School District, (AGC), 4.00%, 7/15/24
    940       1,005,114      
Hoosic Valley Central School District, (AGC), 4.00%, 6/15/23
    1,110       1,197,024      
Longwood Central School District, Suffolk County, (AGC), 4.15%, 6/1/23
    820       884,304      
Longwood Central School District, Suffolk County, (AGC), 4.25%, 6/1/24(3)
    860       925,971      
New York, (AGM), 5.00%, 4/1/22
    2,250       2,498,985      

 
See Notes to Financial Statements.
16


 

 
Eaton Vance
New York Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

 
 
                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – General Obligations (continued)
 
                     
New York Dormitory Authority, (School Districts Financing Program), (NPFG), 5.00%, 10/1/30
  $ 1,750     $ 1,765,925      
Oneida County, (AGC), 4.00%, 4/15/22
    645       694,884      
Syracuse, (AGC), 5.00%, 6/15/19
    1,065       1,258,031      
Wantagh Union Free School District, (AGC), 4.50%, 11/15/19
    785       894,186      
Wantagh Union Free School District, (AGC), 4.50%, 11/15/20
    825       929,932      
Wantagh Union Free School District, (AGC), 4.75%, 11/15/22
    905       1,015,093      
Wantagh Union Free School District, (AGC), 4.75%, 11/15/23
    950       1,060,371      
William Floyd Union Free School District, (AGC), 4.00%, 12/15/24
    1,590       1,687,562      
 
 
            $ 25,068,250      
 
 
 
 
Insured – Hospital — 9.2%
 
New York Dormitory Authority, (Hudson Valley Hospital Center), (AGM), (BHAC), 5.00%, 8/15/36
  $ 4,355     $ 4,572,663      
New York Dormitory Authority, (Maimonides Medical Center), (NPFG), 5.00%, 8/1/33
    4,305       4,379,218      
New York Dormitory Authority, (New York and Presbyterian Hospital), (AGM), (BHAC), (FHA), 5.25%, 2/15/31(2)
    10,000       10,362,000      
 
 
            $ 19,313,881      
 
 
 
 
Insured – Housing — 1.2%
 
New York Housing Development Corp., (FGIC), (NPFG), 5.00%, 7/1/25(3)
  $ 2,350     $ 2,471,566      
 
 
            $ 2,471,566      
 
 
 
 
Insured – Lease Revenue / Certificates of Participation — 2.0%
 
Hudson Yards Infrastructure Corp., (NPFG), 4.50%, 2/15/47
  $ 4,585     $ 4,209,718      
 
 
            $ 4,209,718      
 
 
 
 
Insured – Other Revenue — 8.6%
 
New York City Cultural Resource Trust, (American Museum of Natural History), (NPFG), 5.00%, 7/1/44
  $ 2,055     $ 2,104,443      
New York City Cultural Resource Trust, (Museum of Modern Art), (AMBAC), (BHAC), 5.125%, 7/1/31(2)
    4,250       4,358,800      
New York City Industrial Development Agency, (Yankee Stadium), (NPFG), 4.75%, 3/1/46
    7,385       7,088,788      
New York City Transitional Finance Authority, (BHAC), 5.50%, 7/15/38
    4,050       4,462,331      
 
 
            $ 18,014,362      
 
 
 
 
Insured – Private Education — 20.3%
 
Madison County Industrial Development Agency, (Colgate University), (NPFG), 5.00%, 7/1/39
  $ 4,000     $ 4,106,720      
New York Dormitory Authority, (Brooklyn Law School), (XLCA), 5.125%, 7/1/30
    3,280       3,427,797      
New York Dormitory Authority, (Fordham University), (AGC), (BHAC), 5.00%, 7/1/38(2)
    10,750       11,461,865      
New York Dormitory Authority, (New York University), (AMBAC), 5.00%, 7/1/41
    725       726,943      
New York Dormitory Authority, (Pratt Institute), (AGC), 5.00%, 7/1/34
    1,555       1,639,125      
New York Dormitory Authority, (Pratt Institute), (AGC), 5.125%, 7/1/39
    2,405       2,548,314      
New York Dormitory Authority, (St. John’s University), (NPFG), 5.25%, 7/1/37
    3,750       3,865,012      
New York Dormitory Authority, (State University), (BHAC), 5.00%, 7/1/38(2)
    8,500       9,062,870      
Oneida County Industrial Development Agency, (Hamilton College), (NPFG), 0.00%, 7/1/34
    5,555       1,875,757      
Oneida County Industrial Development Agency, (Hamilton College), (NPFG), 0.00%, 7/1/36
    8,455       2,573,956      
Oneida County Industrial Development Agency, (Hamilton College), (NPFG), 0.00%, 7/1/37
    4,000       1,151,280      
 
 
            $ 42,439,639      
 
 
 
 
Insured – Public Education — 1.4%
 
New York Dormitory Authority, (City University), (AMBAC), 5.50%, 7/1/35
  $ 925     $ 981,471      
New York Dormitory Authority, (Educational Housing Services CUNY Student Housing), (AMBAC), 5.25%, 7/1/23
    1,750       1,935,220      
 
 
            $ 2,916,691      
 
 
 
 
Insured – Solid Waste — 1.9%
 
Ulster County, Resource Recovery Agency, Solid Waste System, (AMBAC), 0.00%, 3/1/21
  $ 1,490     $ 1,100,797      
Ulster County, Resource Recovery Agency, Solid Waste System, (AMBAC), 0.00%, 3/1/23
    1,090       723,117      
Ulster County, Resource Recovery Agency, Solid Waste System, (AMBAC), 0.00%, 3/1/25
    3,635       2,148,249      
 
 
            $ 3,972,163      
 
 
 
 
Insured – Special Tax Revenue — 14.3%
 
Metropolitan Transportation Authority, (AGM), 5.00%, 11/15/32(2)
  $ 14,560     $ 15,121,141      
New York Convention Center Development Corp., Hotel Occupancy Tax, (AMBAC), 4.75%, 11/15/45
    2,930       2,883,618      
New York State Housing Finance Agency, (AGM), 5.00%, 3/15/37
    2,415       2,549,830      
Puerto Rico Infrastructure Financing Authority, (AMBAC), 0.00%, 7/1/36
    3,000       568,650      

 
See Notes to Financial Statements.
17


 

 
Eaton Vance
New York Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

 
 
                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
Insured – Special Tax Revenue (continued)
 
                     
Puerto Rico Infrastructure Financing Authority, (FGIC), 0.00%, 7/1/32
  $ 4,000     $ 1,029,520      
Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45
    18,180       2,439,574      
Sales Tax Asset Receivables Corp., (AMBAC), 5.00%, 10/15/29
    850       910,486      
Sales Tax Asset Receivables Corp., (AMBAC), 5.00%, 10/15/32
    4,185       4,453,133      
 
 
            $ 29,955,952      
 
 
 
 
Insured – Transportation — 9.8%
 
New York Thruway Authority, (AMBAC), 5.50%, 4/1/20
  $ 2,175     $ 2,670,704      
Port Authority of New York and New Jersey, (AGM), 5.00%, 8/15/24(2)
    5,600       6,172,988      
Port Authority of New York and New Jersey, (AGM), 5.00%, 8/15/33(2)
    11,000       11,733,480      
 
 
            $ 20,577,172      
 
 
 
 
Insured – Water and Sewer — 7.3%
 
Nassau County Sewer and Storm Water Finance Authority, (BHAC), 5.125%, 11/1/23
  $ 300     $ 337,602      
Nassau County Sewer and Storm Water Finance Authority, (BHAC), 5.375%, 11/1/28
    3,835       4,256,006      
New York City Municipal Water Finance Authority, (Water and Sewer System), (AMBAC), (BHAC), 5.00%, 6/15/38(2)
    6,500       6,619,405      
New York City Municipal Water Finance Authority, (Water and Sewer System), (BHAC), (NPFG), 5.125%, 6/15/34
    4,000       4,102,480      
 
 
            $ 15,315,493      
 
 
 
 
Insured – Water Revenue — 0.7%
 
Suffolk County Water Authority, (NPFG), 4.50%, 6/1/25
  $ 1,475     $ 1,533,823      
 
 
            $ 1,533,823      
 
 
 
 
Lease Revenue / Certificates of Participation — 1.0%
 
Metropolitan Transportation Authority, Lease Contract, 5.125%, 1/1/29
  $ 2,000     $ 2,050,580      
 
 
            $ 2,050,580      
 
 
 
 
Other Revenue — 3.3%
 
Battery Park City Authority, 5.00%, 11/1/34
  $ 4,925     $ 5,395,830      
Brooklyn Arena Local Development Corp., (Barclays Center), 0.00%, 7/15/31
    4,900       1,532,475      
 
 
            $ 6,928,305      
 
 
 
 
Private Education — 27.2%
 
Hempstead Town Local Development Corp., (Adelphi University Project), 4.50%, 6/1/19
  $ 715     $ 793,393      
Hempstead Town Local Development Corp., (Adelphi University Project), 5.00%, 6/1/20
    760       863,565      
Hempstead Town Local Development Corp., (Adelphi University Project), 5.00%, 6/1/21
    950       1,078,430      
Hempstead Town Local Development Corp., (Adelphi University Project), 5.00%, 6/1/31
    800       832,624      
Hempstead Town Local Development Corp., (Adelphi University Project), 5.00%, 6/1/32
    300       311,280      
Madison County Industrial Development Agency, (Colgate University), 5.00%, 7/1/33
    1,630       1,663,464      
New York City Cultural Resource Trust, (The Juilliard School), 5.00%, 1/1/39
    240       256,445      
New York City Cultural Resource Trust, (The Juilliard School), 5.00%, 1/1/39(2)
    10,000       10,685,200      
New York Dormitory Authority, (Columbia University), 5.00%, 10/1/41(2)
    10,000       11,233,800      
New York Dormitory Authority, (Cornell University), 5.00%, 7/1/37
    20       21,936      
New York Dormitory Authority, (Cornell University), 5.00%, 7/1/37(2)
    5,700       6,251,646      
New York Dormitory Authority, (New York University), 5.00%, 7/1/39(2)
    10,000       10,656,900      
New York Dormitory Authority, (Rochester Institute of Technology), 5.00%, 7/1/40
    2,000       2,112,300      
New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/40
    15       16,256      
New York Dormitory Authority, (Rockefeller University), 5.00%, 7/1/40(2)
    2,700       2,926,017      
New York Dormitory Authority, (Skidmore College), 5.00%, 7/1/26
    1,175       1,295,496      
New York Dormitory Authority, (Skidmore College), 5.25%, 7/1/30
    250       272,590      
New York Dormitory Authority, (The New School), 5.50%, 7/1/40
    5,250       5,635,822      
 
 
            $ 56,907,164      
 
 
 
 
Special Tax Revenue — 8.2%
 
New York City Transitional Finance Authority, Future Tax Revenue, 5.00%, 2/1/35(2)
  $ 10,000     $ 10,865,600      
New York City Transitional Finance Authority, Future Tax Revenue, 5.50%, 11/1/35(2)(4)
    1,000       1,139,030      
New York Dormitory Authority, Personal Income Tax Revenue, 5.00%, 3/15/33
    1,500       1,647,495      
New York Local Government Assistance Corp., 5.00%, 4/1/23
    1,300       1,512,394      
New York Urban Development Corp., Personal Income Tax Revenue, 5.00%, 3/15/32
    1,765       1,880,572      
 
 
            $ 17,045,091      
 
 
 

 
See Notes to Financial Statements.
18


 

 
Eaton Vance
New York Municipal Bond Fund
 
September 30, 2011
 
 
Portfolio of Investments — continued

 
                     
    Principal
           
    Amount
           
Security   (000’s omitted)     Value      
 
 
 
Transportation — 9.1%
 
Metropolitan Transportation Authority, 5.25%, 11/15/38
  $ 3,430     $ 3,664,509      
Nassau County Bridge Authority, 5.00%, 10/1/35
    1,565       1,682,954      
Nassau County Bridge Authority, 5.00%, 10/1/40
    300       318,183      
New York Thruway Authority, 5.00%, 4/1/26
    2,370       2,661,913      
Triborough Bridge and Tunnel Authority, 5.00%, 11/15/38(2)
    10,000       10,642,900      
 
 
            $ 18,970,459      
 
 
 
 
Water Revenue — 1.0%
 
Albany Municipal Water Finance Authority, 5.00%, 12/1/21
  $ 500     $ 594,405      
Albany Municipal Water Finance Authority, 5.00%, 12/1/26
    755       854,275      
Albany Municipal Water Finance Authority, 5.00%, 12/1/29
    500       554,870      
 
 
            $ 2,003,550      
 
 
     
Total Tax-Exempt Investments — 165.4%
   
(identified cost $326,453,706)
  $ 345,733,745      
 
 
             
Other Assets, Less Liabilities — (65.4)%
  $ (136,730,567 )    
 
 
             
Net Assets — 100.0%
  $ 209,003,178      
 
 
 
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
 
     
AGC
 
- Assured Guaranty Corp.
AGM
 
- Assured Guaranty Municipal Corp.
AMBAC
 
- AMBAC Financial Group, Inc.
BHAC
 
- Berkshire Hathaway Assurance Corp.
FGIC
 
- Financial Guaranty Insurance Company
FHA
 
- Federal Housing Administration
NPFG
 
- National Public Finance Guaranty Corp.
XLCA
 
- XL Capital Assurance, Inc.
 
The Fund invests primarily in debt securities issued by New York 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 September 30, 2011, 59.8% of total 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 1.0% to 21.0% of total investments.
 
(1) Security (or a portion thereof) has been pledged to cover margin requirements on open financial futures contracts.
 
(2) Security represents the municipal bond held by a trust that issues residual interest bonds (see Note 1H).
 
 
(3) Security (or a portion thereof) has been pledged as collateral for open swap contracts. The aggregate value of such collateral is $922,499.
 
(4) Security (or a portion thereof) has been pledged as collateral for residual interest bond transactions. The aggregate value of such collateral is $389,030.

 
See Notes to Financial Statements.
19


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Statements of Assets and Liabilities

 
                             
    September 30, 2011    
   
Assets   Municipal Fund   California Fund   New York Fund    
 
Investments —
                           
Identified cost
  $ 1,421,021,534     $ 443,162,170     $ 326,453,706      
Unrealized appreciation
    26,876,276       3,933,917       19,280,039      
 
 
Investments, at value
  $ 1,447,897,810     $ 447,096,087     $ 345,733,745      
 
 
Cash
  $ 4,416,235     $ 6,808,478     $ 4,714,621      
Interest receivable
    18,422,344       5,817,574       4,439,133      
Receivable for investments sold
    826,330       3,433,419       130,464      
Receivable from the transfer agent
          29,491       39,589      
Deferred debt issuance costs
    1,156,574       292,767       103,003      
Miscellaneous receivable
    614,666                  
 
 
Total assets
  $ 1,473,333,959     $ 463,477,816     $ 355,160,555      
 
 
                             
                             
 
Liabilities
 
Payable for floating rate notes issued
  $ 611,885,000     $ 197,490,000     $ 144,160,000      
Payable for when-issued securities
          9,789,166            
Payable for variation margin on open financial futures contracts
    21,078       124,938       10,938      
Payable for open swap contracts
    3,525,400             1,445,414      
Payable to affiliates:
                           
Investment adviser fee
    776,894       239,140       187,317      
Interest expense and fees payable
    1,214,140       417,259       233,062      
Accrued expenses
    206,946       122,993       120,646      
 
 
Total liabilities
  $ 617,629,458     $ 208,183,496     $ 146,157,377      
 
 
Net Assets
  $ 855,704,501     $ 255,294,320     $ 209,003,178      
 
 
                             
                             
 
Sources of Net Assets
 
Common shares, $0.01 par value, unlimited number of shares authorized
  $ 681,098     $ 217,470     $ 158,711      
Additional paid-in capital
    957,747,487       306,615,592       223,619,964      
Accumulated net realized loss
    (128,489,839 )     (55,271,034 )     (33,115,318 )    
Accumulated undistributed net investment income
    2,673,223       1,370,924       608,504      
Net unrealized appreciation
    23,092,532       2,361,368       17,731,317      
 
 
Net Assets
  $ 855,704,501     $ 255,294,320     $ 209,003,178      
 
 
                             
                             
                             
Common Shares Outstanding     68,109,764       21,746,954       15,871,093      
 
 
                             
                             
 
Net Asset Value
 
Net assets ¸ common shares issued and outstanding
  $ 12.56     $ 11.74     $ 13.17      
 
 

 
See Notes to Financial Statements.
20


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Statements of Operations

 
                             
    Year Ended September 30, 2011    
   
Investment Income   Municipal Fund   California Fund   New York Fund    
 
Interest
  $ 74,132,295     $ 22,223,827     $ 16,416,389      
 
 
Total investment income
  $ 74,132,295     $ 22,223,827     $ 16,416,389      
 
 
                             
                             
 
Expenses
 
Investment adviser fee
  $ 9,154,257     $ 2,840,479     $ 2,216,109      
Trustees’ fees and expenses
    45,103       14,370       11,326      
Custodian fee
    308,190       180,464       153,375      
Transfer and dividend disbursing agent fees
    22,844       19,799       20,666      
Legal and accounting services
    262,715       330,653       297,073      
Printing and postage
    100,580       29,772       28,484      
Interest expense and fees
    4,414,912       1,378,739       1,024,390      
Miscellaneous
    55,904       22,542       30,469      
 
 
Total expenses
  $ 14,364,505     $ 4,816,818     $ 3,781,892      
 
 
Deduct —
                           
Reduction of custodian fee
  $ 8,146     $ 2,448     $ 4,242      
 
 
Total expense reductions
  $ 8,146     $ 2,448     $ 4,242      
 
 
                             
Net expenses
  $ 14,356,359     $ 4,814,370     $ 3,777,650      
 
 
                             
Net investment income
  $ 59,775,936     $ 17,409,457     $ 12,638,739      
 
 
                             
                             
 
Realized and Unrealized Gain (Loss)
 
Net realized gain (loss) —
                           
Investment transactions
  $ (27,213,571 )   $ (9,055,676 )   $ (6,765,984 )    
Extinguishment of debt
    (182,724 )     (31,298 )     (62,840 )    
Financial futures contracts
    (3,122,289 )     (8,270,534 )     (621,040 )    
Swap contracts
    (4,684,579 )           (1,544,722 )    
 
 
Net realized loss
  $ (35,203,163 )   $ (17,357,508 )   $ (8,994,586 )    
 
 
Change in unrealized appreciation (depreciation) —
                           
Investments
  $ 5,945,585     $ 1,125,028     $ 3,984,386      
Financial futures contracts
    (258,344 )     (1,667,696 )     (136,345 )    
Swap contracts
    (3,057,016 )           (1,326,436 )    
 
 
Net change in unrealized appreciation (depreciation)
  $ 2,630,225     $ (542,668 )   $ 2,521,605      
 
 
                             
Net realized and unrealized loss
  $ (32,572,938 )   $ (17,900,176 )   $ (6,472,981 )    
 
 
                             
Net increase (decrease) in net assets from operations
  $ 27,202,998     $ (490,719 )   $ 6,165,758      
 
 

 
See Notes to Financial Statements.
21


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Statements of Changes in Net Assets

 
                             
    Year Ended September 30, 2011    
   
Increase (Decrease) in Net Assets   Municipal Fund   California Fund   New York Fund    
 
From operations —
                           
Net investment income
  $ 59,775,936     $ 17,409,457     $ 12,638,739      
Net realized loss from investment transactions, extinguishment of debt, financial futures contracts and swap contracts
    (35,203,163 )     (17,357,508 )     (8,994,586 )    
Net change in unrealized appreciation (depreciation) from investments, financial futures contracts and swap contracts
    2,630,225       (542,668 )     2,521,605      
 
 
Net increase (decrease) in net assets from operations
  $ 27,202,998     $ (490,719 )   $ 6,165,758      
 
 
Distributions to common shareholders —
                           
From net investment income
  $ (62,345,602 )   $ (18,450,457 )   $ (13,072,034 )    
 
 
Total distributions to common shareholders
  $ (62,345,602 )   $ (18,450,457 )   $ (13,072,034 )    
 
 
Capital share transactions —
                           
Reinvestment of distributions to common shareholders
  $ 1,307,692     $ 321,761     $ 456,451      
 
 
Net increase in net assets from capital share transactions
  $ 1,307,692     $ 321,761     $ 456,451      
 
 
                             
Net decrease in net assets
  $ (33,834,912 )   $ (18,619,415 )   $ (6,449,825 )    
 
 
                             
                             
 
Net Assets
 
At beginning of year
  $ 889,539,413     $ 273,913,735     $ 215,453,003      
 
 
At end of year
  $ 855,704,501     $ 255,294,320     $ 209,003,178      
 
 
                             
                             
 
Accumulated undistributed net investment income
included in net assets
 
At end of year
  $ 2,673,223     $ 1,370,924     $ 608,504      
 
 

 
See Notes to Financial Statements.
22


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Statements of Changes in Net Assets — continued

 
                             
    Year Ended September 30, 2010    
   
Increase (Decrease) in Net Assets   Municipal Fund   California Fund   New York Fund    
 
From operations —
                           
Net investment income
  $ 59,651,745     $ 18,386,371     $ 13,143,911      
Net realized loss from investment transactions, extinguishment of debt, financial futures contracts and swap contracts
    (15,732,489 )     (8,209,276 )     (5,964,128 )    
Net change in unrealized appreciation (depreciation) from investments, financial futures contracts and swap contracts
    11,888,406       988,851       5,323,020      
 
 
Net increase in net assets from operations
  $ 55,807,662     $ 11,165,946     $ 12,502,803      
 
 
Distributions to common shareholders —
                           
From net investment income
  $ (61,758,399 )   $ (18,353,136 )   $ (12,961,298 )    
 
 
Total distributions to common shareholders
  $ (61,758,399 )   $ (18,353,136 )   $ (12,961,298 )    
 
 
Capital share transactions —
                           
Reinvestment of distributions to common shareholders
  $ 2,099,016     $ 358,334     $ 608,000      
 
 
Net increase in net assets from capital share transactions
  $ 2,099,016     $ 358,334     $ 608,000      
 
 
                             
Net increase (decrease) in net assets
  $ (3,851,721 )   $ (6,828,856 )   $ 149,505      
 
 
                             
                             
 
Net Assets
 
At beginning of year
  $ 893,391,134     $ 280,742,591     $ 215,303,498      
 
 
At end of year
  $ 889,539,413     $ 273,913,735     $ 215,453,003      
 
 
                             
                             
 
Accumulated undistributed net investment income
included in net assets
 
At end of year
  $ 7,614,534     $ 2,440,120     $ 1,291,746      
 
 

 
See Notes to Financial Statements.
23


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Statements of Cash Flows

 
                             
    Year Ended September 30, 2011    
   
Cash Flows From Operating Activities   Municipal Fund   California Fund   New York Fund    
 
Net increase (decrease) in net assets from operations
  $ 27,202,998     $ (490,719 )   $ 6,165,758      
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by operating activities:
                           
Investments purchased
    (248,041,477 )     (91,669,215 )     (95,232,787 )    
Investments sold
    281,271,441       102,347,765       102,617,257      
Net amortization/accretion of premium (discount)
    (11,340,069 )     (2,752,242 )     (1,335,101 )    
Amortization of deferred debt issuance costs
    174,353       58,749       61,959      
Increase in interest receivable
    (723,818 )     (209,369 )     (131,122 )    
Decrease (increase) in receivable for investments sold
    4,767,549       (3,433,419 )     (77,886 )    
Decrease in receivable from the transfer agent
    150,035       568       3,963      
Increase in miscellaneous receivable
    (614,666 )                
Decrease in payable for investments purchased
    (6,022,460 )                
Increase in payable for when-issued securities
          9,789,166            
Increase in payable for variation margin on open financial futures contracts
    21,078       115,938       7,813      
Increase in payable for open swap contracts
    3,057,016             1,326,436      
Decrease in payable to affiliate for investment adviser fee
    (26,405 )     (11,466 )     (4,210 )    
Decrease in interest expense and fees payable
    (119,437 )     (134,582 )     (39,473 )    
Decrease in accrued expenses
    (132,644 )     (40,663 )     (20,682 )    
Net change in unrealized (appreciation) depreciation from investments
    (5,945,585 )     (1,125,028 )     (3,984,386 )    
Net realized loss from investments
    27,213,571       9,055,676       6,765,984      
Net realized loss on extinguishment of debt
    182,724       31,298       62,840      
 
 
Net cash provided by operating activities
  $ 71,074,204     $ 21,532,457     $ 16,186,363      
 
 
                             
                             
 
Cash Flows From Financing Activities
 
Distributions paid to common shareholders, net of reinvestments
  $ (61,037,910 )   $ (18,128,696 )   $ (12,615,583 )    
Proceeds from secured borrowings
    89,590,000       66,870,000       68,500,000      
Repayment of secured borrowings
    (94,315,000 )     (65,905,000 )     (66,565,000 )    
Decrease in due to custodian
    (895,059 )           (791,159 )    
 
 
Net cash used in financing activities
  $ (66,657,969 )   $ (17,163,696 )   $ (11,471,742 )    
 
 
                             
Net increase in cash
  $ 4,416,235     $ 4,368,761     $ 4,714,621      
 
 
                             
Cash at beginning of year
  $     $ 2,439,717     $      
 
 
                             
Cash at end of year
  $ 4,416,235     $ 6,808,478     $ 4,714,621      
 
 
                             
                             
 
Supplemental disclosure of cash flow information:
 
Noncash financing activities not included herein consist of:
                           
Reinvestment of dividends and distributions
  $ 1,307,692     $ 321,761     $ 456,451      
Cash paid for interest and fees
    4,359,996       1,454,572       1,001,904      
 
 

 
See Notes to Financial Statements.
24


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Financial Highlights

 
                                             
    Municipal Fund
   
    Year Ended September 30,    
   
    2011   2010   2009   2008   2007    
 
Net asset value — Beginning of year (Common shares)
  $ 13.080     $ 13.170     $ 11.080     $ 15.100     $ 15.910      
 
 
                                             
                                             
 
Income (Loss) From Operations
 
Net investment income(1)
  $ 0.878     $ 0.878     $ 0.846     $ 0.959     $ 1.050      
Net realized and unrealized gain (loss)
    (0.482 )     (0.059 )     2.051       (3.797 )     (0.419 )    
Distributions to preferred shareholders
                                           
From net investment income
                      (0.171 )     (0.225 )    
From net realized gain
                      (0.051 )     (0.113 )    
 
 
Total income (loss) from operations
  $ 0.396     $ 0.819     $ 2.897     $ (3.060 )   $ 0.293      
 
 
                                             
                                             
 
Less Distributions to Common Shareholders
 
From net investment income
  $ (0.916 )   $ (0.909 )   $ (0.807 )   $ (0.773 )   $ (0.771 )    
From net realized gain
                      (0.187 )     (0.332 )    
 
 
Total distributions to common shareholders
  $ (0.916 )   $ (0.909 )   $ (0.807 )   $ (0.960 )   $ (1.103 )    
 
 
                                             
Net asset value — End of year (Common shares)
  $ 12.560     $ 13.080     $ 13.170     $ 11.080     $ 15.100      
 
 
                                             
Market value — End of year (Common shares)
  $ 12.350     $ 13.900     $ 13.160     $ 11.140     $ 15.310      
 
 
                                             
Total Investment Return on Net Asset Value(2)
    3.89 %     6.77 %     28.15 %     (21.24 )%     1.87 %    
 
 
                                             
Total Investment Return on Market Value(2)
    (3.87 )%     13.55 %     27.36 %     (21.90 )%     7.97 %    
 
 
                                             
                                             
 
Ratios/Supplemental Data
 
Net assets applicable to common shares, end of year (000’s omitted)
  $ 855,705     $ 889,539     $ 893,391     $ 719,392     $ 977,406      
Ratios (as a percentage of average daily net assets applicable to common shares):(3)
                                           
Expenses excluding interest and fees
    1.25 %     1.12 %     1.04 %     0.89 %     0.79 %    
Interest and fee expense(4)
    0.56 %     0.54 %     1.33 %     0.59 %          
Total expenses before custodian fee reduction
    1.81 %     1.66 %     2.37 %     1.48 %     0.79 %    
Expenses after custodian fee reduction excluding interest and fees
    1.25 %     1.12 %     1.04 %     0.86 %     0.78 %    
Net investment income
    7.54 %     7.04 %     7.94 %     6.94 %     6.76 %    
Portfolio Turnover
    18 %     18 %     19 %     54 %     39 %    
 
 
 
(1) Computed using average common shares outstanding.
(2) Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested.
(3) Ratios do not reflect the effect of dividend payments to preferred shareholders.
(4) Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 
See Notes to Financial Statements.
25


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Financial Highlights — continued

 
                                             
    California Fund
   
    Year Ended September 30,    
   
    2011   2010   2009   2008   2007    
 
Net asset value — Beginning of year (Common shares)
  $ 12.610     $ 12.940     $ 11.310     $ 15.000     $ 15.280      
 
 
                                             
                                             
 
Income (Loss) From Operations
 
Net investment income(1)
  $ 0.801     $ 0.847     $ 0.827     $ 0.930     $ 1.024      
Net realized and unrealized gain (loss)
    (0.822 )     (0.331 )     1.570       (3.418 )     (0.269 )    
Distributions to preferred shareholders
                                           
From net investment income
                      (0.153 )     (0.296 )    
From net realized gain
                      (0.094 )          
 
 
Total income (loss) from operations
  $ (0.021 )   $ 0.516     $ 2.397     $ (2.735 )   $ 0.459      
 
 
                                             
                                             
 
Less Distributions to Common Shareholders
 
From net investment income
  $ (0.849 )   $ (0.846 )   $ (0.767 )   $ (0.724 )   $ (0.739 )    
From net realized gain
                      (0.231 )          
 
 
Total distributions to common shareholders
  $ (0.849 )   $ (0.846 )   $ (0.767 )   $ (0.955 )   $ (0.739 )    
 
 
                                             
Net asset value — End of year (Common shares)
  $ 11.740     $ 12.610     $ 12.940     $ 11.310     $ 15.000      
 
 
                                             
Market value — End of year (Common shares)
  $ 12.270     $ 13.300     $ 12.970     $ 11.090     $ 14.720      
 
 
                                             
Total Investment Return on Net Asset Value(2)
    0.48 %     4.53 %     22.99 %     (19.08 )%     3.10 %    
 
 
                                             
Total Investment Return on Market Value(2)
    (0.43 )%     10.00 %     25.72 %     (19.15 )%     4.18 %    
 
 
                                             
                                             
 
Ratios/Supplemental Data
 
Net assets applicable to common shares, end of year (000’s omitted)
  $ 255,294     $ 273,914     $ 280,743     $ 245,011     $ 324,508      
Ratios (as a percentage of average daily net assets applicable to common shares):(3)
                                           
Expenses excluding interest and fees
    1.42 %     1.16 %     1.06 %     0.95 %     0.81 %    
Interest and fee expense(4)
    0.57 %     0.56 %     1.28 %     0.51 %          
Total expenses before custodian fee reduction
    1.99 %     1.72 %     2.34 %     1.46 %     0.81 %    
Expenses after custodian fee reduction excluding interest and fees
    1.42 %     1.16 %     1.04 %     0.92 %     0.81 %    
Net investment income
    7.20 %     7.01 %     7.64 %     6.74 %     6.73 %    
Portfolio Turnover
    21 %     11 %     8 %     39 %     27 %    
 
 
 
(1) Computed using average common shares outstanding.
(2) Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested.
(3) Ratios do not reflect the effect of dividend payments to preferred shareholders.
(4) Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 
See Notes to Financial Statements.
26


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Financial Highlights — continued

 
                                             
    New York Fund
   
    Year Ended September 30,    
   
    2011   2010   2009   2008   2007    
 
Net asset value — Beginning of year (Common shares)
  $ 13.610     $ 13.640     $ 11.650     $ 14.800     $ 15.140      
 
 
                                             
                                             
 
Income (Loss) From Operations
 
Net investment income(1)
  $ 0.797     $ 0.831     $ 0.790     $ 0.923     $ 1.012      
Net realized and unrealized gain (loss)
    (0.412 )     (0.041 )     1.934       (3.152 )     (0.335 )    
Distributions to preferred shareholders
                                           
From net investment income
                      (0.215 )     (0.302 )    
 
 
Total income (loss) from operations
  $ 0.385     $ 0.790     $ 2.724     $ (2.444 )   $ 0.375      
 
 
                                             
                                             
 
Less Distributions to Common Shareholders
 
From net investment income
  $ (0.825 )   $ (0.820 )   $ (0.734 )   $ (0.706 )   $ (0.715 )    
 
 
Total distributions to common shareholders
  $ (0.825 )   $ (0.820 )   $ (0.734 )   $ (0.706 )   $ (0.715 )    
 
 
                                             
Net asset value — End of year (Common shares)
  $ 13.170     $ 13.610     $ 13.640     $ 11.650     $ 14.800      
 
 
                                             
Market value — End of year (Common shares)
  $ 13.450     $ 14.010     $ 14.120     $ 10.980     $ 14.500      
 
 
                                             
Total Investment Return on Net Asset Value(2)
    3.37 %     6.16 %     24.78 %     (17.07 )%     2.59 %    
 
 
                                             
Total Investment Return on Market Value(2)
    2.56 %     5.56 %     37.06 %     (20.22 )%     3.87 %    
 
 
                                             
                                             
 
Ratios/Supplemental Data
 
Net assets applicable to common shares, end of year (000’s omitted)
  $ 209,003     $ 215,453     $ 215,303     $ 183,643     $ 232,624      
Ratios (as a percentage of average daily net assets applicable to common shares):(3)
                                           
Expenses excluding interest and fees
    1.39 %     1.12 %     1.04 %     0.99 %     0.86 %    
Interest and fee expense(4)
    0.52 %     0.55 %     1.34 %     0.55 %          
Total expenses before custodian fee reduction
    1.91 %     1.67 %     2.38 %     1.54 %     0.86 %    
Expenses after custodian fee reduction excluding interest and fees
    1.39 %     1.12 %     1.03 %     0.95 %     0.85 %    
Net investment income
    6.37 %     6.30 %     6.83 %     6.63 %     6.72 %    
Portfolio Turnover
    29 %     11 %     21 %     48 %     28 %    
 
 
 
(1) Computed using average common shares outstanding.
(2) Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested.
(3) Ratios do not reflect the effect of dividend payments to preferred shareholders.
(4) Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H).

 
See Notes to Financial Statements.
27


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements

 
1 Significant Accounting Policies
 
Eaton Vance Municipal Bond Fund, Eaton Vance California Municipal Bond Fund and Eaton Vance New York Municipal Bond Fund, (each individually referred to as the Fund, and collectively, the Funds), are Massachusetts business trusts registered under the Investment Company Act of 1940, as amended (the 1940 Act), as non-diversified, closed-end management investment companies. The Funds seek to provide current income exempt from regular federal income tax, including alternative minimum tax, and, in state specific funds, taxes in its specified state.
 
The following is a summary of significant accounting policies of the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America.
 
A Investment Valuation — Debt obligations (including short-term obligations with a remaining maturity of more than sixty days) are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. Financial futures contracts are valued at the closing settlement price established by the board of trade or exchange on which they are traded. Interest rate swaps are normally valued using valuations provided by a third party pricing service. Such pricing service valuations are based on the present value of fixed and projected floating rate cash flows over the term of the swap contract. Future cash flows are discounted to their present value using swap rates provided by electronic data services or by broker/dealers. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of a Fund in a manner that fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
 
B Investment Transactions and Related Income — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
 
C Federal Taxes — Each Fund’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 substantially all of its taxable, if any, and tax-exempt net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary. Each Fund intends to satisfy conditions which will enable it to designate distributions from the interest income generated by its investments in municipal obligations, which are exempt from regular federal income tax when received by each Fund, as exempt-interest dividends.
 
At September 30, 2011, the following Funds, for federal income tax purposes, had capital loss carryforwards which will reduce the respective Fund’s taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Funds of any liability for federal income or excise tax. The amounts and expiration dates of the capital loss carryforwards are as follows:
 
                             
Expiration Date   Municipal Fund   California Fund   New York Fund    
 
 
September 30, 2012
  $ 314,751     $     $      
September 30, 2013
                125,998      
September 30, 2015
    31,250                  
September 30, 2016
    6,857,645       533,889            
September 30, 2017
    18,034,628       4,562,453       7,946,914      
September 30, 2018
    56,183,712       23,169,615       8,909,352      
September 30, 2019
    16,458,561       7,665,268       6,463,209      
                             
 
 
    $ 97,880,547     $ 35,931,225     $ 23,445,473      
                             
 
 
 
In addition, such capital loss carryforwards cannot be utilized prior to the utilization of new capital losses, if any, created after September 30, 2011.

 
28


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
Additionally, at September 30, 2011, the Municipal Fund, California Fund and New York Fund had net capital losses of $37,513,142, $19,463,688 and $8,695,243, respectively, attributable to security transactions incurred after October 31, 2010. These net capital losses are treated as arising on the first day of the Funds’ taxable year ending September 30, 2012.
 
As of September 30, 2011, the Funds had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Funds’ federal tax returns filed in the 3-year period ended September 30, 2011 remains subject to examination by the Internal Revenue Service.
 
D Expense Reduction — State Street Bank and Trust Company (SSBT) serves as custodian of the Funds. Pursuant to the respective custodian agreements, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance each Fund maintains with SSBT. All credit balances, if any, used to reduce each Fund’s custodian fees are reported as a reduction of expenses in the Statements of Operations.
 
E Legal Fees — Legal fees and other related expenses incurred as part of negotiations of the terms and requirement of capital infusions, or that are expected to result in the restructuring of, or a plan of reorganization for, an investment are recorded as realized losses. Ongoing expenditures to protect or enhance an investment are treated as operating expenses.
 
F Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
 
G Indemnifications — Under each Fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to each Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as a Fund) could be deemed to have personal liability for the obligations of the Fund. However, each Fund’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Fund shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, each Fund enters into agreements with service providers that may contain indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against each Fund that have not yet occurred.
 
H Floating Rate Notes Issued in Conjunction with Securities Held — The Funds may invest in residual interest bonds, also referred to as inverse floating rate securities, whereby a Fund may sell a variable or fixed rate bond to a broker for cash. At the same time, the Fund buys a residual interest in the assets and cash flows of a Special-Purpose Vehicle (the SPV), (which is generally organized as a trust), set up by the broker. The broker deposits a bond into the SPV with the same CUSIP number as the bond sold to the broker by the Fund, and which may have been, but is not required to be, the bond purchased from the Fund (the Bond). The SPV also issues floating rate notes (Floating Rate Notes) which are sold to third-parties. The residual interest bond held by a Fund gives the Fund the right (1) to cause the holders of the Floating Rate Notes to generally tender their notes at par, and (2) to have the broker transfer the Bond held by the SPV to the Fund, thereby terminating the SPV. Should the Fund exercise such right, it would generally pay the broker the par amount due on the Floating Rate Notes and exchange the residual interest bond for the underlying Bond. Pursuant to generally accepted accounting principles for transfers and servicing of financial assets and extinguishment of liabilities, the Funds account for the transaction described above as a secured borrowing by including the Bond in their Portfolio of Investments and the Floating Rate Notes as a liability under the caption “Payable for floating rate notes issued” in their Statement of Assets and Liabilities. The Floating Rate Notes have interest rates that generally reset weekly and their holders have the option to tender their notes to the broker for redemption at par at each reset date. Interest expense related to the Funds’ liability with respect to Floating Rate Notes is recorded as incurred. The SPV may be terminated by the Fund, as noted above, or by the broker upon the occurrence of certain termination events as defined in the trust agreement, such as a downgrade in the credit quality of the underlying Bond, bankruptcy of or payment failure by the issuer of the underlying Bond, the inability to remarket Floating Rate Notes that have been tendered due to insufficient buyers in the market, or the failure by the SPV to obtain renewal of the liquidity agreement under which liquidity support is provided for the Floating Rate Notes up to one year. Structuring fees paid to the liquidity provider upon the creation of an SPV have been recorded as debt issuance costs and are being amortized as interest expense to the expected maturity of the related trust. Unamortized structuring fees related to a terminated SPV are recorded as a realized loss on extinguishment of debt. At September 30, 2011, the amounts of the Funds’ Floating Rate Notes and related interest rates and collateral were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Floating Rate Notes Outstanding
  $ 611,885,000     $ 197,490,000     $ 144,160,000      
Interest Rate or Range of Interest Rates (%)
    0.16 - 0.46       0.16 - 0.17       0.14 - 0.17      
Collateral for Floating Rate Notes Outstanding
  $ 679,032,250     $ 214,592,951     $ 162,575,445      
                             
 
 

 
29


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
For the year ended September 30, 2011, the Funds’ average Floating Rate Notes outstanding and the average interest rate including fees and amortization of deferred debt issuance costs were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Average Floating Rate Notes Outstanding
  $ 614,331,932     $ 196,018,411     $ 143,054,699      
Average Interest Rate
    0.72 %     0.70 %     0.72 %    
                             
 
 
 
The Funds may enter into shortfall and forbearance agreements with the broker by which a Fund agrees to reimburse the broker, in certain circumstances, for the difference between the liquidation value of the Bond held by the SPV and the liquidation value of the Floating Rate Notes, as well as any shortfalls in interest cash flows. The Funds had no shortfalls as of September 30, 2011.
 
The Funds may also purchase residual interest bonds from brokers in a secondary market transaction without first owning the underlying bond. Such transactions are not required to be treated as secured borrowings. Shortfall agreements, if any, related to residual interest bonds purchased in a secondary market transaction are disclosed in the Portfolio of Investments.
 
The Funds’ investment policies and restrictions expressly permit investments in residual interest bonds. Such bonds typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality and maturity. These securities tend to underperform the market for fixed rate bonds in a rising long-term interest rate environment, but tend to outperform the market for fixed rate bonds when long-term interest rates decline. The value and income of residual interest bonds are generally more volatile than that of a fixed rate bond. The Funds’ investment policies do not allow the Funds to borrow money except as permitted by the 1940 Act. Management believes that the Funds’ restrictions on borrowing money and issuing senior securities (other than as specifically permitted) do not apply to Floating Rate Notes issued by the SPV and included as a liability in the Funds’ Statement of Assets and Liabilities. As secured indebtedness issued by an SPV, Floating Rate Notes are distinct from the borrowings and senior securities to which the Funds’ restrictions apply. Residual interest bonds held by the Funds are securities exempt from registration under Rule 144A of the Securities Act of 1933.
 
I Financial Futures Contracts — Upon entering into a financial futures contract, a Fund is required to deposit with the broker, either in cash or securities, an amount equal to a certain percentage of the purchase price (initial margin). Subsequent payments, known as variation margin, are made or received by the Fund each business day, depending on the daily fluctuations in the value of the underlying security, and are recorded as unrealized gains or losses by the Fund. Gains (losses) are realized upon the expiration or closing of the financial futures contracts. Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. Futures contracts have minimal counterparty risk as they are exchange traded and the clearinghouse for the exchange is substituted as the counterparty, guaranteeing counterparty performance.
 
J Interest Rate Swaps — Pursuant to interest rate swap agreements, a Fund makes periodic payments at a fixed interest rate and, in exchange, receives payments based on the interest rate of a benchmark industry index. Payments received or made are recorded as realized gains or losses. During the term of the outstanding swap agreement, changes in the underlying value of the swap are recorded as unrealized gains or losses. The value of the swap is determined by changes in the relationship between two rates of interest. A Fund is exposed to credit loss in the event of non-performance by the swap counterparty. Risk may also arise from movements in interest rates.
 
K When-Issued Securities and Delayed Delivery Transactions — The Funds may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. At the time the transaction is negotiated, the price of the security that will be delivered is fixed. The Funds maintain security positions for these commitments such that sufficient liquid assets will be available to make payments upon settlement. Securities purchased on a delayed delivery or when-issued basis are marked-to-market daily and begin earning interest on settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
 
L Statement of Cash Flows — The cash amount shown in the Statement of Cash Flows of a Fund is the amount included in the Fund’s Statement of Assets and Liabilities and represents the cash on hand at its custodian and does not include any short-term investments.
 
2 Distributions to Shareholders
 
Each Fund intends to make monthly distributions of net investment income to common shareholders. In addition, at least annually, each Fund intends to distribute all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards from prior years, if any). Distributions are recorded on the ex-dividend date.
 
The Funds distinguish between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.

 
30


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
The tax character of distributions declared for the years ended September 30, 2011 and September 30, 2010 was as follows:
 
                             
Year Ended September 30, 2011   Municipal Fund   California Fund   New York Fund    
 
 
Distributions declared from:
                           
Tax-exempt income
  $ 62,334,562     $ 18,365,683     $ 13,057,383      
Ordinary income
    11,040       84,774       14,651      
                             
 
 
 
                             
Year Ended September 30, 2010   Municipal Fund   California Fund   New York Fund    
 
 
Distributions declared from:
                           
Tax-exempt income
  $ 61,651,650     $ 18,342,429     $ 12,958,618      
Ordinary income
    106,749       10,707       2,680      
                             
 
 
 
During the year ended September 30, 2011, the following amounts were reclassified due to differences between book and tax accounting, primarily for accretion of market discount:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Change in:
                           
Accumulated net realized loss
  $ 2,371,645     $ 28,196     $ 249,947      
Accumulated undistributed net investment income
  $ (2,371,645 )   $ (28,196 )   $ (249,947 )    
                             
 
 
 
These reclassifications had no effect on the net assets or net asset value per share of the Funds.
 
As of September 30, 2011, the components of distributable earnings (accumulated losses) and unrealized appreciation (depreciation) on a tax basis were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Undistributed tax-exempt income
  $ 2,673,223     $ 1,370,924     $ 608,504      
Capital loss carryforward and post October losses
  $ (135,393,689 )   $ (55,394,913 )   $ (32,140,716 )    
Net unrealized appreciation
  $ 29,996,382     $ 2,485,247     $ 16,756,715      
                             
 
 
 
The differences between components of distributable earnings (accumulated losses) on a tax basis and the amounts reflected in the Statements of Assets and Liabilities are primarily due to wash sales, residual interest bonds, futures contracts and accretion of market discount.
 
3 Investment Adviser Fee and Other Transactions with Affiliates
 
The investment adviser fee is earned by Eaton Vance Management (EVM) as compensation for investment advisory services rendered to each Fund. The fee is computed at an annual rate of 0.65% of each Fund’s average weekly gross assets and is payable monthly. Average weekly gross assets include the principal amount of any indebtedness for money borrowed, including debt securities issued by a Fund. Pursuant to a fee reduction agreement with EVM, average weekly gross assets are calculated by adding to net assets the amount payable by the Fund to floating rate note holders, such adjustment being limited to the value of the Auction Preferred Shares (APS) outstanding prior to any APS redemptions by the Fund. EVM also serves as the administrator of each Fund, but receives no compensation. For the year ended September 30, 2011, the investment adviser fees were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Investment Adviser Fee
  $ 9,154,257     $ 2,840,479     $ 2,216,109      
                             
 
 

 
31


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
Except for Trustees of the Funds who are not members of EVM’s organization, officers and Trustees receive remuneration for their services to the Funds out of the investment adviser fee. Trustees of the Funds who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the year ended September 30, 2011, no significant amounts have been deferred. Certain officers and Trustees of the Funds are officers of EVM.
 
4 Purchases and Sales of Investments
 
Purchases and sales of investments, other than short-term obligations, for the year ended September 30, 2011 were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Purchases
  $ 248,041,477     $ 91,669,215     $ 95,232,787      
Sales
  $ 281,271,441     $ 102,347,765     $ 102,617,257      
                             
 
 
 
5 Common Shares of Beneficial Interest
 
Common shares issued pursuant to the Funds’ dividend reinvestment plan for the years ended September 30, 2011 and September 30, 2010 were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Year Ended September 30, 2011
    114,120       29,025       36,395      
Year Ended September 30, 2010
    167,055       29,357       45,987      
                             
 
 
 
6 Federal Income Tax Basis of Investments
 
The cost and unrealized appreciation (depreciation) of investments of each Fund at September 30, 2011, as determined on a federal income tax basis, were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Aggregate cost
  $ 802,491,028     $ 247,120,840     $ 183,371,616      
                             
 
 
Gross unrealized appreciation
  $ 84,352,536     $ 16,256,195     $ 20,109,950      
Gross unrealized depreciation
    (50,830,754 )     (13,770,948 )     (1,907,821 )    
                             
 
 
Net unrealized appreciation
  $ 33,521,782     $ 2,485,247     $ 18,202,129      
                             
 
 
 
7 Financial Instruments
 
The Funds may trade in financial instruments with off-balance sheet risk in the normal course of their investing activities. These financial instruments may include financial futures contracts and 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 a Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered.

 
32


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
A summary of obligations under these financial instruments at September 30, 2011 is as follows:
 
                                         
Futures Contracts
                        Net
   
    Expiration
          Aggregate
      Unrealized
   
Fund   Date   Contracts   Position   Cost   Value   Depreciation    
 
 
Municipal   12/11   47
U.S. 10-Year Treasury Note
  Short   $ (6,067,289 )   $ (6,114,406 )   $ (47,117 )    
    12/11   30
U.S. 30-Year Treasury Bond
  Short   $ (4,067,523 )   $ (4,278,750 )   $ (211,227 )    
                                         
 
 
California   12/11   200
U.S. 10-Year Treasury Note
  Short   $ (25,812,134 )   $ (26,018,750 )   $ (206,616 )    
    12/11   194
U.S. 30-Year Treasury Bond
  Short   $ (26,303,317 )   $ (27,669,250 )   $ (1,365,933 )    
                                         
 
 
New York   12/11   100
U.S. 10-Year Treasury Note
  Short   $ (12,906,067 )   $ (13,009,375 )   $ (103,308 )    
                                         
 
 
 
                                     
Interest Rate Swaps
Municipal Fund
        Annual
  Floating
  Effective Date/
  Net
   
    Notional
  Fixed Rate
  Rate
  Termination
  Unrealized
   
Counterparty   Amount   Paid By Fund   Paid To Fund   Date   Depreciation    
 
 
Bank of America   $ 30,000,000       3.256 %   3-month
USD-LIBOR-BBA
  November 11, 2011/
November 11, 2041
  $ (3,525,400 )    
                                     
 
 
                                     
                                     
New York Fund
        Annual
  Floating
  Effective Date/
  Net
   
    Notional
  Fixed Rate
  Rate
  Termination
  Unrealized
   
Counterparty   Amount   Paid By Fund   Paid To Fund   Date   Depreciation    
 
 
Bank of America   $ 12,300,000       3.256 %   3-month
USD-LIBOR-BBA
  November 11, 2011/
November 11, 2041
  $ (1,445,414 )    
                                     
 
 
 
The effective date represents the date on which a Fund and the counterparty to the interest rate swap contract begin interest payment accruals.
 
At September 30, 2011, the Funds had sufficient cash and/or securities to cover commitments under these contracts.
 
Each Fund is subject to interest rate risk in the normal course of pursuing its investment objectives. Because the Funds hold fixed-rate bonds, the value of these bonds may decrease if interest rates rise. To hedge against this risk, the Municipal Fund and New York Fund entered into interest rate swap contracts. The Funds also purchase and sell U.S. Treasury futures contracts to hedge against changes in interest rates.
 
The Funds enter into interest rate swap contracts that may contain provisions whereby the counterparty may terminate the contract under certain conditions, including but not limited to a decline in a Fund’s net assets below a certain level over a certain period of time, which would trigger a payment by the Fund for those swaps in a liability position. At September 30, 2011, the fair value of interest rate swaps with credit-related contingent features in a net liability position was equal to the fair value of the liability derivative related to interest rate swaps included in the table below for each respective Fund. The value of securities pledged as collateral, if any, for open interest rate swap contracts at September 30, 2011 is disclosed in a note to each Fund’s Portfolio of Investments.
 
The non-exchange traded derivatives in which a Fund invests, including swap contracts, are subject to the risk that the counterparty to the contract fails to perform its obligations under the contract. At September 30, 2011, the maximum amount of loss the Funds would incur due to counterparty risk was equal to the fair value of the asset derivative related to interest rate swaps, which was none for each respective Fund. Counterparties may be required to

 
33


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
pledge collateral in the form of cash, U.S. Government securities or highly-rated bonds for the benefit of a Fund if the net amount due from the counterparty with respect to a derivative contract exceeds a certain threshold. The amount of collateral posted by the counterparties with respect to such contracts would also reduce the amount of any loss incurred.
 
The fair values of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is interest rate risk at September 30, 2011 were as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Liability Derivative:
                           
Futures Contracts
  $ (258,344 )(1)   $ (1,572,549 )(1)   $ (103,308 )(1)    
Interest Rate Swaps
    (3,525,400 )(2)           (1,445,414 )(2)    
                             
 
 
Total
  $ (3,783,744 )   $ (1,572,549 )   $ (1,548,722 )    
                             
 
 
 
(1) Amount represents cumulative unrealized depreciation on futures contracts in the Futures Contracts table above. Only the current day’s variation margin on open futures contracts is reported within the Statement of Assets and Liabilities as Receivable or Payable for variation margin, as applicable.
(2) Statement of Assets and Liabilities location: Payable for open swap contracts; Net unrealized appreciation.
 
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is interest rate risk for the year ended September 30, 2011 was as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Realized Gain (Loss) on Derivatives Recognized in Income(1)
  $ (7,806,868 )   $ (8,270,534 )   $ (2,165,762 )    
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income(2)
  $ (3,315,360 )   $ (1,667,696 )   $ (1,462,781 )    
                             
 
 
 
(1) Statement of Operations location: Net realized gain (loss) – Financial futures contracts and Swap contracts.
(2) Statement of Operations location: Change in unrealized appreciation (depreciation) – Financial futures contracts and Swap contracts.
 
The average notional amounts of futures contracts and interest rate swaps outstanding during the year ended September 30, 2011, which are indicative of the volume of these derivative types, were approximately as follows:
 
                             
    Municipal Fund   California Fund   New York Fund    
 
 
Average Notional Amount:
                           
Futures Contracts
  $ 10,554,000     $ 39,208,000     $ 8,462,000      
Interest Rate Swaps
  $ 46,521,000     $     $ 16,224,000      
                             
 
 
 
8 Fair Value Measurements
 
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
 
•  Level 1 – quoted prices in active markets for identical investments
 
•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
 
•  Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)
 
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 
34


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Notes to Financial Statements — continued

 
At September 30, 2011, the hierarchy of inputs used in valuing the Funds’ investments and open derivative instruments, which are carried at value, were as follows:
 
                                     
Municipal Fund
   
Asset Description   Level 1   Level 2   Level 3   Total    
 
 
Tax-Exempt Investments
  $     $ 1,447,897,810     $      —     $ 1,447,897,810      
                                     
 
 
Total Investments
  $     $ 1,447,897,810     $     $ 1,447,897,810      
                                     
 
 
Liability Description
                                   
                                     
 
 
Futures Contracts
  $ (258,344 )   $     $     $ (258,344 )    
Interest Rate Swaps
          (3,525,400 )           (3,525,400 )    
                                     
 
 
Total
  $ (258,344 )   $ (3,525,400 )   $     $ (3,783,744 )    
                                     
 
 
                                     
                                     
California Fund
Asset Description   Level 1   Level 2   Level 3   Total    
 
 
Tax-Exempt Investments
  $     $ 447,096,087     $     $ 447,096,087      
                                     
 
 
Total Investments
  $     $ 447,096,087     $     $ 447,096,087      
                                     
 
 
Liability Description
                                   
                                     
 
 
Futures Contracts
  $ (1,572,549 )   $     $     $ (1,572,549 )    
                                     
 
 
Total
  $ (1,572,549 )   $     $     $ (1,572,549 )    
                                     
 
 
                                     
                                     
New York Fund
   
Asset Description   Level 1   Level 2   Level 3   Total    
 
 
Tax-Exempt Investments
  $     $ 345,733,745     $     $ 345,733,745      
                                     
 
 
Total Investments
  $     $ 345,733,745     $     $ 345,733,745      
                                     
 
 
Liability Description
                                   
                                     
 
 
Futures Contracts
  $ (103,308 )   $     $     $ (103,308 )    
Interest Rate Swaps
          (1,445,414 )           (1,445,414 )    
                                     
 
 
Total
  $ (103,308 )   $ (1,445,414 )   $     $ (1,548,722 )    
                                     
 
 
 
The Funds held no investments or other financial instruments as of September 30, 2010 whose fair value was determined using Level 3 inputs. At September 30, 2011, the value of investments transferred between Level 1 and Level 2, if any, during the year then ended was not significant.
 
9 Other Matters
 
In May 2010, the Municipal Fund received a demand letter from a law firm on behalf of a putative common shareholder. The demand letter alleged that Eaton Vance Management and the Trustees and officers of the Municipal Fund breached their fiduciary duty to such Fund in connection with redemption by such Fund of its auction preferred securities following the collapse of auction markets in February 2008. The letter demanded that the Board of Trustees of the Municipal Fund take certain action to remedy those alleged breaches. In August 2010, following a thorough investigation conducted by the independent Trustees of the Municipal Fund, the Board of Trustees of such Fund (including all of the independent Trustees) rejected the demands set forth in the demand letter. Substantially similar demand letters were received by the New York Fund in September 2010 and the California Fund in October 2010. In December, 2010, following a thorough investigation conducted by the independent Trustees of the New York Fund and California Fund, the Board of Trustees of such Funds (including all of the independent Trustees) rejected the demands set forth in the demand letters. To date, a shareholder derivative action has not been filed.

 
35


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Report of Independent Registered Public Accounting Firm

 
 
To the Trustees and Shareholders of Eaton Vance Municipal Bond Fund, Eaton Vance California Municipal Bond Fund and Eaton Vance New York Municipal Bond Fund:
 
We have audited the accompanying statements of assets and liabilities of Eaton Vance Municipal Bond Fund, Eaton Vance California Municipal Bond Fund and Eaton Vance New York Municipal Bond Fund (collectively, the “Funds”), including the portfolios of investments, as of September 30, 2011, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2011, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Eaton Vance Municipal Bond Fund, Eaton Vance California Municipal Bond Fund and Eaton Vance New York Municipal Bond Fund as of September 30, 2011, the results of their operations and their cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
 
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 16, 2011

 
36


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Federal Tax Information (Unaudited)

 
 
The Form 1099-DIV you receive in January 2012 will show the tax status of all distributions paid to your account in calendar year 2011. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Funds. As required by the Internal Revenue Code and/or regulations, shareholders must be notified within 60 days of the Funds’ fiscal year end regarding exempt-interest dividends.
 
Exempt-Interest Dividends. The Funds designate the following percentages of dividends from net investment income as exempt-interest dividends:
 
             
Municipal Bond Fund
    99.98 %    
California Municipal Bond Fund
    99.54 %    
New York Municipal Bond Fund
    99.89 %    

 
37


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Annual Meeting of Shareholders (Unaudited)

 
 
The Funds held their Annual Meeting of Shareholders on July 22, 2011. The following action was taken by the shareholders:
 
Item 1: The election of Ronald A. Pearlman and Helen Frame Peters as Class III Trustees of each Fund for a term expiring in 2014 and Benjamin C. Esty as Class II Trustee of each Fund for a term expiring in 2013.
 
                             
    Nominee for Class III Trustee
  Nominee for Class III Trustee
  Nominee for Class II Trustee
   
    Elected by All Shareholders:
  Elected by All Shareholders:
  Elected by All Shareholders:
   
    Ronald A. Pearlman   Helen Frame Peters   Benjamin C. Esty    
 
Municipal Fund
                           
For
    62,379,989       62,540,275       62,610,979      
Withheld
    2,031,898       1,871,612       1,800,908      
California Fund
                           
For
    19,733,380       19,856,933       19,859,883      
Withheld
    779,572       656,019       653,069      
New York Fund
                           
For
    14,217,756       14,341,752       14,267,649      
Withheld
    906,666       782,670       856,773      

 
38


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Dividend Reinvestment Plan

 
 
Each Fund offers a dividend reinvestment plan (Plan) pursuant to which shareholders may elect to have distributions automatically reinvested in common shares (Shares) of the Fund. You may elect to participate in the Plan by completing the Dividend Reinvestment Plan Application Form. If you do not participate, you will receive all distributions in cash paid by check mailed directly to you by American Stock Transfer & Trust Company (AST) as dividend paying agent. On the distribution payment date, if the NAV 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 NAV per Share or 95% of the market price. Otherwise, Shares generally will be purchased on the open market by AST, the Plan agent (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 each Fund’s transfer agent re-register your Shares in your name or you will not be able to participate.
 
The Agent’s service fee for handling distributions will be paid by each Fund. Plan participants 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 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 Agent to sell part or all of his or her Shares and remit the proceeds, the 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 Agent. Any inquiries regarding the Plan can be directed to the Agent at 1-866-439-6787.

 
39


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
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 DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.
 
This authorization form, when signed, should be mailed to the following address:
 
Eaton Vance Municipal Bond Funds
c/o American Stock Transfer & Trust Company
P.O. Box 922
Wall Street Station
New York, NY 10269-0560
 
Number of Employees
Each Fund is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company and has no employees.
 
Number of Shareholders
As of September 30, 2011, Fund records indicate that there are 687, 132 and 133 registered shareholders for Municipal Bond Fund, California Municipal Bond Fund and New York Municipal Bond Fund, respectively, and approximately 25,330, 5,774 and 5,503 shareholders owning the Fund shares in street name, such as through brokers, banks and financial intermediaries for Municipal Bond Fund, California Municipal Bond Fund and New York Municipal Bond Fund, respectively.
 
If you are a street name shareholder and wish to receive Fund reports directly, which contain important information about a Fund, please write or call:
 
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
1-800-262-1122
 
         
NYSE Amex symbols
       
Municipal Bond Fund
    EIM  
California Municipal Bond Fund
    EVM  
New York Municipal Bond Fund
    ENX  

 
40


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Board of Trustees’ Contract Approval

 
 
Overview of the Contract Review Process
 
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
 
At a meeting of the Boards of Trustees (each a “Board”) of the Eaton Vance group of mutual funds (the “Eaton Vance Funds”) held on April 25, 2011, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Contract Review Committee of the Board, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished for a series of meetings of the Contract Review Committee held between February and April 2011. Such information included, among other things, the following:
 
Information about Fees, Performance and Expenses
 
  •  An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds;
  •  An independent report comparing each fund’s total expense ratio and its components to comparable funds;
  •  An independent report comparing the investment performance of each fund (including yield data and Sharpe and information ratios where relevant) to the investment performance of comparable funds over various time periods;
  •  Data regarding investment performance in comparison to relevant peer groups of similarly managed funds and appropriate indices;
  •  For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other mutual funds and institutional accounts using investment strategies and techniques similar to those used in managing such fund;
  •  Profitability analyses for each adviser with respect to each fund;
 
Information about Portfolio Management
 
  •  Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed, and any changes in portfolio management processes and personnel;
  •  Information about the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and/or the fund’s policies with respect to “soft dollar” arrangements;
  •  Data relating to portfolio turnover rates of each fund;
  •  The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes;
 
Information about each Adviser
 
  •  Reports detailing the financial results and condition of each adviser;
  •  Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts;
  •  Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes;
  •  Copies of or descriptions of each adviser’s policies and procedures relating to proxy voting, the handling of corporate actions and class actions;
  •  Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions;
  •  Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates;
  •  A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers;
 
Other Relevant Information
 
  •  Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates;
  •  Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and
  •  The terms of each advisory agreement.

 
41


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Board of Trustees’ Contract Approval — continued

 
In addition to the information identified above, the Contract Review Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve-month period ended April 30, 2011, with respect to one or more funds, the Board met nine times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met nine, fifteen, seven, eight and twelve times, respectively. At such meetings, the Trustees received, among other things, presentations by the portfolio managers and other investment professionals of each adviser relating to the investment performance of each fund and the investment strategies used in pursuing the fund’s investment objective including, where relevant, the use of derivative instruments, as well as trading policies and procedures and risk management techniques.
 
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
 
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each advisory and sub-advisory agreement.
 
Results of the Process
 
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuance of the investment advisory agreements of the following funds:
 
  •  Eaton Vance Municipal Bond Fund
  •  Eaton Vance California Municipal Bond Fund
  •  Eaton Vance New York Municipal Bond Fund
 
(the “Funds”), each with Eaton Vance Management (the “Adviser”), including their fee structures, are in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of each agreement. The Board accepted the recommendation of the Contract Review Committee as well as the factors considered and conclusions reached by the Contract Review Committee with respect to each agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for each Fund.
 
Nature, Extent and Quality of Services
 
In considering whether to approve the investment advisory agreements of the Funds, the Board evaluated the nature, extent and quality of services provided to the Funds by the Adviser.
 
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by each Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Funds. In particular, the Board evaluated, where relevant, the abilities and experience of such investment personnel in analyzing factors such as credit risk, tax efficiency, and special considerations relevant to investing in municipal bonds. The Board considered the Adviser’s large municipal bond team, which includes portfolio managers and credit specialists who provide services to the Funds. The Board also took into account the resources dedicated to portfolio management and other services, including the compensation methods of the Adviser to recruit and retain investment personnel, and the time and attention devoted to each Fund by senior management.
 
The Board also reviewed the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
 
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large family of funds.
 
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement for each Fund.
 
Fund Performance
 
The Board compared each Fund’s investment performance to a relevant universe of similarly managed funds identified by an independent data provider and appropriate benchmark indices and, where relevant, a peer group of similarly managed funds. The Board reviewed comparative performance data for

 
42


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Board of Trustees’ Contract Approval — continued

 
the one-, three-, five- and ten-year periods ended September 30, 2010 for each Fund. The Board considered the impact of extraordinary market conditions in recent years on each Fund’s performance relative to its peer universe in light of, among other things, the Adviser’s efforts to generate reasonably stable levels of tax exempt current income over time through investments in higher quality municipal bonds with longer maturities. The Board noted that the Adviser had taken action to restructure each Fund’s portfolio as part of a long-term strategy for managing interest rate risk and credit risk, consistent with each Fund’s objective of providing current income. The Board concluded that additional time is required to evaluate the effectiveness of such actions.
 
Management Fees and Expenses
 
The Board reviewed contractual investment advisory fee rates payable by each Fund (referred to as “management fees”). As part of its review, the Board considered each Fund’s management fee and total expense ratio for the year ended September 30, 2010, as compared to a group of similarly managed funds selected by an independent data provider. The Board also considered factors that had an impact on the Funds’ expense ratios, as identified by management in response to inquiries from the Contract Review Committee, as well as actions being taken to reduce expenses at the Eaton Vance fund complex level, including the negotiation of reduced fees for transfer agency and custody services. The Board noted that the Adviser had waived fees and/or paid expenses for each of the Funds.
 
After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded with respect to each Fund that the management fees charged to the Fund for advisory and related services are reasonable.
 
Profitability
 
The Board reviewed the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to each Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized with and without regard to revenue sharing or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser and its affiliates in connection with their relationship with the Funds, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for a Fund and other investment advisory clients. The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are reasonable.
 
Economies of Scale
 
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and each Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of each Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of each Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. The Board also considered the fact that the Funds are not continuously offered and concluded that, in light of the level of the Adviser’s profits with respect to each Fund, the implementation of breakpoints in each Fund’s advisory fee schedule is not appropriate at this time. Based upon the foregoing, the Board concluded that each Fund currently shares in the benefits from economies of scale.

 
43


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Management and Organization

 
 
Fund Management. The Trustees of Eaton Vance Municipal Bond Fund (EIM), Eaton Vance California Municipal Bond Fund (EVM) and Eaton Vance New York Municipal Bond Fund (ENX) (the Funds) are responsible for the overall management and supervision of the Funds’ affairs. The Trustees and officers of the Funds 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 Funds, as that term is defined under the 1940 Act. The business address of each Trustee and officer is Two International Place, Boston, Massachusetts 02110. As used below, “EVC” refers to Eaton Vance Corp., “EV” refers to Eaton Vance, Inc., “EVM” refers to Eaton Vance Management, “BMR” refers to Boston Management and Research and “EVD” refers to Eaton Vance Distributors, Inc. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is a wholly-owned subsidiary of EVC. Each officer affiliated with Eaton Vance may hold a position with other Eaton Vance affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 179 portfolios in the Eaton Vance Complex (including all master and feeder funds in a master feeder structure). Each officer serves as an officer of certain other Eaton Vance funds. Each Trustee serves for a three year term. Each officer serves until his or her successor is elected.
 
             
    Position(s)
       
    with the
  Term of Office;
  Principal Occupation(s) and Directorships
Name and Year of Birth   Funds   Length of Service   During Past Five Years and Other Relevant Experience
 
 
 
Interested Trustee
             
Thomas E. Faust Jr.
1958
  Class II Trustee   Until 2013. 3 years.
Trustee since 2007.
  Chairman, Chief Executive Officer and President of EVC, Director and President of EV, Chief Executive Officer and President of EVM and BMR, and Director of EVD. Trustee and/or officer of 179 registered investment companies and 1 private investment company managed by EVM or BMR. Mr. Faust is an interested person because of his positions with EVM, BMR, EVD, EVC and EV, which are affiliates of the Funds.
Directorships in the Last Five Years.(1) Director of EVC.
 
Noninterested Trustees
             
Scott E. Eston
1956
  Class II Trustee   Until 2013. 2 years.
Trustee since 2011.
  Private investor; formerly held various positions at Grantham, Mayo, Van Otterloo and Co., L.L.C. (investment management firm) (1997-2009), including Chief Operating Officer (2002-2009), Chief Financial Officer (1997-2009) and Chairman of the Executive Committee (2002-2008); President and Principal Executive Officer, GMO Trust (2006-2009) (open-end registered investment company); Partner, Coopers and Lybrand L.L.P. (public accounting firm) (1987-1997).
Directorships in the Last Five Years. None.
             
Benjamin C. Esty
1963
  Class II Trustee   Until 2013. 2 years.
Trustee since 2005.
  Roy and Elizabeth Simmons Professor of Business Administration and Finance Unit Head, Harvard University Graduate School of Business Administration.
Directorships in the Last Five Years.(1) None.
             
Allen R. Freedman
1940
  Class II Trustee   Until 2013. 3 years.
Trustee since 2007.
  Private Investor. Former Chairman (2002-2004) and a Director (1983-2004) of Systems & Computer Technology Corp. (provider of software to higher education). Formerly, a Director of Loring Ward International (fund distributor) (2005-2007). Former Chairman and a Director of Indus International, Inc. (provider of enterprise management software to the power generating industry) (2005-2007). Former Chief Executive Officer of Assurant, Inc. (insurance provider) (1979-2000).
Directorships in the Last Five Years.(1) Director of Stonemor Partners, L.P. (owner and operator of cemeteries). Formerly, Director of Assurant, Inc. (insurance provider) (1979-2011).
             
William H. Park
1947
  Class I Trustee   Until 2012. 3 years.
Trustee since 2003.
  Consultant and private investor. Formerly, Chief Financial Officer, Aveon Group L.P. (investment management firm) (2010-2011). Formerly, Vice Chairman, Commercial Industrial Finance Corp. (specialty finance company) (2006-2010). Formerly, President and Chief Executive Officer, Prizm Capital Management, LLC (investment management firm) (2002-2005). Formerly, Executive Vice President and Chief Financial Officer, United Asset Management Corporation (investment management firm) (1982-2001). Formerly, Senior Manager, Price Waterhouse (now PricewaterhouseCoopers) (an independent registered public accounting firm) (1972-1981).
Directorships in the Last Five Years.(1) None.
             
Ronald A. Pearlman
1940
  Class III Trustee   Until 2014. 3 years.
Trustee since 2003.
  Professor of Law, Georgetown University Law Center. Formerly, Deputy Assistant Secretary (Tax Policy) and Assistant Secretary (Tax Policy), U.S. Department of the Treasury (1983-1985). Formerly, Chief of Staff, Joint Committee on Taxation, U.S. Congress (1988-1990).
Directorships in the Last Five Years.(1) None.

 
44


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Management and Organization — continued

 
             
    Position(s)
       
    with the
  Term of Office;
  Principal Occupation(s) and Directorships
Name and Year of Birth   Funds   Length of Service   During Past Five Years and Other Relevant Experience
 
 
Noninterested Trustees (continued)
             
Helen Frame Peters
1948
  Class III Trustee   Until 2014. 3 years.
Trustee since 2008.
  Professor of Finance, Carroll School of Management, Boston College. Formerly, Dean, Carroll School of Management, Boston College (2000-2002). Formerly, Chief Investment Officer, Fixed Income, Scudder Kemper Investments (investment management firm) (1998-1999). Formerly, Chief Investment Officer, Equity and Fixed Income, Colonial Management Associates (investment management firm) (1991-1998).
Directorships in the Last Five Years.(1) Formerly, Director of BJ’s Wholesale Club, Inc. (wholesale club retailer) (2004-2011). Formerly, Trustee of SPDR Index Shares Funds and SPDR Series Trust (exchange traded funds) (2000-2009). Formerly, Director of Federal Home Loan Bank of Boston (a bank for banks) (2007-2009).
             
Lynn A. Stout
1957
  Class I Trustee   Until 2012. 3 years.
Trustee since 2002.
  Paul Hastings Professor of Corporate and Securities Law (since 2006) and Professor of Law (2001-2006), University of California at Los Angeles School of Law. Directorships in the Last Five Years.(1) None.
             
Harriett Tee Taggart
1948
  Class III Trustee   Until 2014. 3 years.
Trustee since 2011.
  Managing Director, Taggart Associates (a professional practice firm); formerly, Partner and Senior Vice President, Wellington Management Company, LLP (investment management firm) (1983-2006).
Directorships in the Last Five Years. Director of Albemarle Corporation (chemicals manufacturer) (since 2007) and The Hanover Group (specialty property and casualty insurance company) (since 2009). Formerly, Director of Lubrizol Corporation (specialty chemicals) (2007-2011).
             
Ralph F. Verni
1943
  Chairman of the Board and Class I Trustee   Until 2012. 3 years. Chairman of the Board since 2007 and Trustee since 2005.   Consultant and private investor. Formerly, Chief Investment Officer (1982-1992), Chief Financial Officer (1988-1990) and Director (1982-1992), New England Life. Formerly, Chairperson, New England Mutual Funds (1982-1992). Formerly, President and Chief Executive Officer, State Street Management & Research (1992-2000). Formerly, Chairperson, State Street Research Mutual Funds (1992-2000). Formerly, Director, W.P. Carey, LLC (1998-2004) and First Pioneer Farm Credit Corp. (2002-2006).
Directorships in the Last Five Years.(1) None.
             
             
 
Principal Officers who are not Trustees
    Position(s)
       
    with the
  Length of
  Principal Occupation(s)
Name and Year of Birth   Funds   Service   During Past Five Years
 
 
             
Cynthia J. Clemson
1963
  President of EVM and ENX   Since 2005   Vice President of EVM and BMR.
             
Thomas M. Metzold
1958
  President of EIM   Since 2010   Vice President of EVM and BMR.
             
Payson F. Swaffield
1956
  Vice President   Since 2011   Chief Income Investment Officer of EVC. Vice President of EVM and BMR.
             
Barbara E. Campbell
1957
  Treasurer   Since 2005   Vice President of EVM and BMR.

 
45


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
Management and Organization — continued

 
             
    Position(s)
       
    with the
  Length of
  Principal Occupation(s)
Name and Year of Birth   Funds   Service   During Past Five Years
 
 
Principal Officers who are not Trustees (continued)
             
Maureen A. Gemma
1960
  Vice President, Secretary and Chief Legal Officer   Vice President since 2011, Secretary since 2007 and Chief Legal Officer since 2008   Vice President of EVM and BMR.
             
Paul M. O’Neil
1953
  Chief Compliance Officer   Since 2004   Vice President of EVM and BMR.
 
(1) During their respective tenures, the Trustees (except Eston and Taggart) also served as trustees of one or more of the following Eaton Vance funds (which operated in the years noted): Eaton Vance Credit Opportunities Fund (launched in 2005 and terminated in 2010); Eaton Vance Insured Florida Plus Municipal Bond Fund (launched in 2002 and terminated in 2009); and Eaton Vance National Municipal Income Trust (launched in 1998 and terminated in 2009).

 
46


 

 
Eaton Vance
Municipal Bond Funds
 
September 30, 2011
 
 
IMPORTANT NOTICES

 
 
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
 
•  Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions.
 
•  None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a 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 Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com.
 
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’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.
 
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will be effective within 30 days of receipt by Eaton Vance or your financial advisor.
 
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the 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).
 
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
 
Additional Notice to Shareholders. A Fund may purchase shares of its common stock in the open market when they trade at a discount to net asset value or at other times if a Fund determines such purchases are advisable. There can be no assurance that a Fund will take such action or that such purchases would reduce the discount.
 
Closed-End Fund Information. The Eaton Vance closed-end funds make certain quarterly fund performance data and information about portfolio characteristics (such as top holdings and asset allocation) available on the Eaton Vance website after the end of each calendar quarter-end. Certain month end fund performance data for the funds, including total returns, are posted to the website shortly after the end of each calendar month. Portfolio holdings for the most recent calendar quarter-end are also posted to the website approximately 30 days following the end of the quarter. This information is available at www.eatonvance.com on the fund information pages under “Individual Investors – Closed-End Funds”.

 
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Investment Adviser and Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
 
Custodian
State Street Bank and Trust Company
200 Clarendon Street
Boston, MA 02116
 
Transfer Agent
American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
 
 
 
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
 
Fund Offices
Two International Place
Boston, MA 02110


 

 
 
(EATON VANCE INVESTMENT MANAGERS LOGO)
 
1453-11/11 CE-IMBSRC


 

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, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is a consultant and private investor. Previously, he served as the Chief Financial Officer of Aveon Group, L.P. (an investment management firm), as the Vice Chairman of Commercial Industrial Finance Corp. (specialty finance company), as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm), as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (an institutional investment management firm) and as a Senior Manager at Price Waterhouse (now PricewaterhouseCoopers) (an independent registered public accounting firm).

 


 

Item 4. Principal Accountant Fees and Services
(a) —(d)
The following table presents the aggregate fees billed to the registrant for the registrant’s fiscal years ended September 30, 2010 and September 30, 2011 by the registrant’s principal accountant, Deloitte & Touche LLP (“D&T”), for professional services rendered for the audit of the registrant’s annual financial statements and fees billed for other services rendered by D&T during such periods.
                 
Fiscal Years Ended   9/30/10     9/30/11  
 
Audit Fees
  $ 59,480     $ 59,970  
Audit-Related Fees(1)
  $ 0     $ 0  
Tax Fees(2)
  $ 12,854     $ 13,200  
All Other Fees(3)
  $ 500     $ 300  
     
Total
  $ 72,834     $ 73,470  
     
 
 
(1)   Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of financial statements and are not reported under the category of audit fees.
 
(2)   Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation and other related tax compliance/planning matters.
 
(3)   All other fees consist of the aggregate fees billed for products and services provided by the registrant’s 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 to the registrant by D&T for the registrant’s fiscal years ended September 30, 2010 and September 30, 2011; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the Eaton Vance organization by D&T for the same time periods.
                 
Fiscal Years Ended   9/30/10     9/30/11  
 
Registrant
  $ 13,354     $ 13,500  
Eaton Vance(1)
  $ 278,901     $ 226,431  
 
 
(1)   The investment adviser to the registrant, as well as any of its affiliates that provide ongoing services to the registrant, are subsidiaries of Eaton Vance Corp.
(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. William H. Park (Chair), Scott E. Eston, Helen Frame Peters, Lynn A. Stout and Ralph F. Verni 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’s Special Committee 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. An independent proxy voting service (“Agent”), currently Institutional Shareholder Services, Inc., has been retained to assist in the voting of

 


 

proxies through the provision of vote analysis, implementation and recordkeeping and disclosure services. The investment adviser will generally vote proxies through the Agent. The Agent is required to vote all proxies and/or refer them back to the investment adviser pursuant to the Policies. It is generally the policy of the investment adviser to vote in accordance with the recommendation of the Agent. The Agent shall refer to the investment adviser proxies relating to mergers and restructurings, and the disposition of assets, termination, liquidation and mergers contained in mutual fund proxies. The investment adviser will normally vote against anti-takeover measures and other proposals designed to limit the ability of shareholders to act on possible transactions, except in the case of closed-end management investment companies. The investment adviser generally supports management on social and environmental proposals. 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 or the economic effect on shareholders interests or the value of the portfolio holding is indeterminable or insignificant.
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 personnel of the investment adviser identified in the Policies. If such personnel expects to instruct the Agent to vote such proxies in a manner inconsistent with the guidelines of the Policies or the recommendation of the Agent, the personnel will consult with members of senior management of the investment adviser to determine if a material conflict of interests exists. If it is determined that a material conflict does exist, the investment adviser will seek instruction on how to vote from the Special Committee.
Information on how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 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. Portfolio Managers of Closed-End Management Investment Companies
Portfolio Management
Cynthia J. Clemson, William H. Ahern, Jr. and Craig R. Brandon are the portfolio managers of Eaton Vance California Municipal Bond Fund, Eaton Vance Municipal Bond Fund and Eaton Vance New York Municipal Bond Fund, respectively, and are responsible for the overall and day-to-day management of each Fund’s investments.
Ms. Clemson has been an Eaton Vance portfolio manager since 1991 and is a Vice President of Eaton Vance Management (“EVM”) and Boston Management and Research (“BMR”). Mr. Ahern has been an Eaton Vance portfolio manager since 1993 and is a Vice President of EVM and BMR. Mr. Brandon has been an Eaton Vance analyst since 1998 and a portfolio manager since 2004, and is a Vice President of EVM and BMR. This information is provided as of the date of filing of this report.
The following tables show, as of each Fund’s most recent fiscal year end, the number of accounts each portfolio manager managed in each of the listed categories and the total assets (in millions of dollars) in the accounts managed within each category. The table also shows the number of accounts with respect to which the advisory fee is based on the performance of the account, if any, and the total assets (in millions of dollars) in those accounts.

 


 

                                 
                    Number of        
    Number             Accounts     Total Assets of  
    of All     Total Assets of     Paying a     Accounts Paying a  
    Accounts     All Accounts     Performance Fee     Performance Fee  
Cynthia J. Clemson
                               
Registered Investment Companies
    10     $ 2,437.1       0     $ 0  
Other Pooled Investment Vehicles
    0     $ 0       0     $ 0  
Other Accounts
    0     $ 0       0     $ 0  
 
                               
William H. Ahern, Jr.
                               
Registered Investment Companies
    13     $ 3,114.9       0     $ 0  
Other Pooled Investment Vehicles
    0     $ 0       0     $ 0  
Other Accounts
    1     $ 21.9       0     $ 0  
 
                               
Craig R. Brandon
                               
Registered Investment Companies
    13     $ 1,539.1       0     $ 0  
Other Pooled Investment Vehicles
    0     $ 0       0     $ 0  
Other Accounts
    0     $ 0       0     $ 0  
The following table shows the dollar range of Fund shares beneficially owned by each portfolio manager as of each Fund’s most recent fiscal year end.
         
    Dollar Range of Equity  
    Securities Owned  
    in the Fund  
California Municipal Bond Fund
       
Cynthia J. Clemson
  None
Municipal Bond Fund
       
William H. Ahern, Jr.
  None
New York Municipal Bond Fund
       
Craig R. Brandon
  None
Potential for Conflicts of Interest. It is possible that conflicts of interest may arise in connection with a portfolio manager’s management of a Fund’s investments on the one hand and investments of other accounts for which a portfolio manager is responsible on the other. For example, a portfolio manager may have conflicts of interest in allocating management time, resources and investment opportunities among the Fund and other accounts he or she advises. In addition, due to differences in the investment strategies or restrictions between a Fund and the other accounts, a portfolio manager may take action with respect to another account that differs from the action taken with respect to the Fund. In some cases, another account managed by a portfolio manager may compensate the investment adviser based on the performance of the securities held by that account. The existence of such a performance based fee may create additional conflicts of interest for a portfolio manager in the allocation of management

 


 

time, resources and investment opportunities. Whenever conflicts of interest arise, a portfolio manager will endeavor to exercise his or her discretion in a manner that he or she believes is equitable to all interested persons. EVM has adopted several policies and procedures designed to address these potential conflicts including a code of ethics and policies which govern the investment adviser’s trading practices, including among other things the aggregation and allocation of trades among clients, brokerage allocation, cross trades and best execution.
Compensation Structure for EVM
Compensation of EVM’s portfolio managers and other investment professionals has three primary components: (1) a base salary, (2) an annual cash bonus, and (3) annual stock-based compensation consisting of options to purchase shares of EVC’s nonvoting common stock and/or restricted shares of EVC’s nonvoting common stock. EVM’s investment professionals also receive certain retirement, insurance and other benefits that are broadly available to EVM’s employees. Compensation of EVM’s investment professionals is reviewed primarily on an annual basis. Cash bonuses, stock-based compensation awards, and adjustments in base salary are typically paid or put into effect at or shortly after the October 31st fiscal year end of EVC.
Method to Determine Compensation. EVM compensates its portfolio managers based primarily on the scale and complexity of their portfolio responsibilities and the total return performance of managed funds and accounts versus the benchmark(s) stated in the prospectus, as well as an appropriate peer group (as described). In addition to rankings within peer groups of funds on the basis of absolute performance, consideration may also be given to relative risk-adjusted performance. Risk-adjusted performance measures include, but are not limited to, the Sharpe Ratio. Performance is normally based on periods ending on the September 30th preceding fiscal year end. Fund performance is normally evaluated primarily versus peer groups of funds as determined by Lipper Inc. and/or Morningstar, Inc. When a fund’s peer group as determined by Lipper or Morningstar is deemed by EVM’s management not to provide a fair comparison, performance may instead be evaluated primarily against a custom peer group. In evaluating the performance of a fund and its manager, primary emphasis is normally placed on three-year performance, with secondary consideration of performance over longer and shorter periods. For funds that are tax-managed or otherwise have an objective of after-tax returns, performance is measured net of taxes. For other funds, performance is evaluated on a pre-tax basis. For funds with an investment objective other than total return (such as current income), consideration will also be given to the fund’s success in achieving its objective. For managers responsible for multiple funds and accounts, investment performance is evaluated on an aggregate basis, based on averages or weighted averages among managed funds and accounts. Funds and accounts that have performance-based advisory fees are not accorded disproportionate weightings in measuring aggregate portfolio manager performance.
The compensation of portfolio managers with other job responsibilities (such as heading an investment group or providing analytical support to other portfolios) will include consideration of the scope of such responsibilities and the managers’ performance in meeting them.
EVM seeks to compensate portfolio managers commensurate with their responsibilities and performance, and competitive with other firms within the investment management industry. EVM participates in investment-industry compensation surveys and utilizes survey data as a factor in determining salary, bonus and stock-based compensation levels for portfolio managers and other investment professionals. Salaries, bonuses and stock-based compensation are also influenced by the operating performance of EVM and its parent company. The overall annual cash bonus pool is based on a substantially fixed percentage of pre-bonus operating income. While the salaries of EVM’s portfolio managers are comparatively fixed, cash bonuses and stock-based compensation may fluctuate significantly from year to year, based on changes in manager performance and other factors as

 


 

described herein. For a high performing portfolio manager, cash bonuses and stock-based compensation may represent a substantial portion of total compensation.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
No such purchases this period.
Item 10. Submission of Matters to a Vote of Security Holders
No Material Changes.
Item 11. Controls and Procedures
(a) It is the conclusion of the 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. 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 California Municipal Bond Fund
         
     
  By:   /s/ Cynthia J. Clemson    
    Cynthia J. Clemson   
    President   
 
Date: November 16, 2011
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/ Barbara E. Campbell    
    Barbara E. Campbell   
    Treasurer   
Date: November 16, 2011
         
  By:   /s/ Cynthia J. Clemson    
    Cynthia J. Clemson   
    President   
Date: November 16, 2011