UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-08134
Eaton Vance Municipals Trust II
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110
(Address of Principal Executive Offices)
Deidre E. Walsh
Two International Place, Boston, Massachusetts 02110
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number)
January 31
Date of Fiscal Year End
July 31, 2022
Date of Reporting Period
Item 1. Reports to Stockholders
Eaton Vance
High Yield Municipal
Income Fund
Income Fund
Semiannual Report
July 31, 2022
Commodity Futures Trading Commission Registration. The Commodity Futures Trading Commission (“CFTC”) has adopted regulations that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a
prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The investment adviser has claimed an exclusion
from the definition of “commodity pool operator” under the Commodity Exchange Act with respect to its management of the Fund. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC
regulation. Because of its management of other strategies, the Fund's adviser is registered with the CFTC as a commodity pool operator. The adviser is also registered as a commodity trading advisor.
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.
This report must be preceded or accompanied by a current
summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and
prospectus, which can be obtained from a financial intermediary. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Performance
Portfolio Manager(s) Cynthia J.
Clemson and William J. Delahunty, CFA
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
Six Months | One Year | Five Years | Ten Years |
| Class A at NAV | 08/07/1995 | 08/07/1995 | (6.18)% | (8.69)% | 2.43% | 3.73% |
| Class A with 3.25% Maximum Sales Charge | — | — | (9.28) | (11.68) | 1.75 | 3.39 |
| Class C at NAV | 06/18/1997 | 08/07/1995 | (6.57) | (9.41) | 1.65 | 3.11 |
| Class C with 1% Maximum Sales Charge | — | — | (7.49) | (10.29) | 1.65 | 3.11 |
| Class I at NAV | 05/09/2007 | 08/07/1995 | (6.06) | (8.45) | 2.68 | 4.00 |
| Class W at NAV | 10/01/2021 | 08/07/1995 | (5.85) | (8.15) | 2.75 | 4.03 |
|
| ||||||
| Bloomberg Municipal Bond Index | — | — | (3.95)% | (6.93)% | 1.88% | 2.49% |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class W |
| Gross | 0.76% | 1.51% | 0.51% | 0.48% |
| Net | 0.76 | 1.51 | 0.51 | 0.09 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I | Class W |
| Distribution Rate | 3.63% | 2.89% | 3.88% | 4.33% |
| Taxable-Equivalent Distribution Rate | 6.13 | 4.88 | 6.55 | 7.32 |
| SEC 30-day Yield | 3.06 | 2.42 | 3.41 | 3.84 |
| Taxable-Equivalent SEC 30-day Yield | 5.17 | 4.09 | 5.76 | 6.49 |
| % Total Leverage5 | |
| Residual Interest Bond (RIB) Financing | 4.85% |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to
pay on Fund distributions or upon the redemption of Fund shares. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance for periods less than or equal to
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
eatonvance.com.
2
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Fund Profile
| Credit Quality (% of total investments)*,** |
| * | For purposes of the Fund’s rating restrictions, ratings are based on Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), as applicable. If securities are rated differently by the ratings agencies, the highest rating is applied. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by S&P or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality. Credit ratings are based largely on the ratings agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and 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. Holdings designated as “Not Rated” (if any) are not rated by the national ratings agencies stated above. |
| ** | The chart includes the municipal bonds held by a trust that issues residual interest bonds, consistent with the Portfolio of Investments. |
3
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for
the entire period (February 1, 2022 to July 31, 2022).
Actual Expenses
The first section of the table below provides information about
actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table below provides information
about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with
the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
| Beginning
Account Value (2/1/22) |
Ending
Account Value (7/31/22) |
Expenses
Paid During Period* (2/1/22 – 7/31/22) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $ 938.20 | $3.99 | 0.83% |
| Class C | $1,000.00 | $ 934.30 | $7.58 | 1.58% |
| Class I | $1,000.00 | $ 939.40 | $2.79 | 0.58% |
| Class W | $1,000.00 | $ 941.50 | $0.67** | 0.14% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,020.68 | $4.16 | 0.83% |
| Class C | $1,000.00 | $1,016.96 | $7.90 | 1.58% |
| Class I | $1,000.00 | $1,021.92 | $2.91 | 0.58% |
| Class W | $1,000.00 | $1,024.10 | $0.70** | 0.14% |
| * | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, 2022. |
| ** | Absent a reimbursement of investment advisory fees by an affiliate, expenses would be higher. |
5
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited)
6
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
7
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
8
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
9
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
10
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
11
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
12
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
13
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
14
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
15
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
| Futures Contracts | |||||
| Description | Number
of Contracts |
Position | Expiration
Date |
Notional
Amount |
Value/Unrealized
Appreciation (Depreciation) |
| Interest Rate Futures | |||||
| U.S. 10-Year Treasury Note | (175) | Short | 9/21/22 | $(21,199,609) | $ (338,776) |
| U.S. Long Treasury Bond | (112) | Short | 9/21/22 | (16,128,000) | (519,086) |
| $(857,862) | |||||
| Abbreviations: | |
| AGC | – Assured Guaranty Corp. |
| AGM | – Assured Guaranty Municipal Corp. |
| AMBAC | – AMBAC Financial Group, Inc. |
| AMT | – Interest earned from these securities may be considered a tax preference item for purposes of the Federal Alternative Minimum Tax. |
| BAM | – Build America Mutual Assurance Co. |
| LOC | – Letter of Credit |
| NPFG | – National Public Finance Guarantee Corp. |
| PSF | – Permanent School Fund |
16
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Statement of Assets
and Liabilities (Unaudited)
| July 31, 2022 | |
| Assets | |
| Unaffiliated investments, at value (identified cost $1,316,862,656) | $ 1,325,272,090 |
| Cash | 3,233,703 |
| Deposits for derivatives collateral — futures contracts | 741,619 |
| Interest receivable | 13,179,431 |
| Receivable for investments sold | 12,484,394 |
| Receivable for Fund shares sold | 7,722,583 |
| Receivable from affiliate | 9,090 |
| Total assets | $1,362,642,910 |
| Liabilities | |
| Payable for floating rate notes issued | $ 63,829,827 |
| Payable for when-issued securities | 38,220,270 |
| Payable for Fund shares redeemed | 5,957,597 |
| Payable for variation margin on open futures contracts | 121,841 |
| Distributions payable | 614,899 |
| Payable to affiliates: | |
| Investment adviser fee | 448,720 |
| Distribution and service fees | 123,939 |
| Interest expense and fees payable | 172,552 |
| Accrued expenses | 374,681 |
| Total liabilities | $ 109,864,326 |
| Net Assets | $1,252,778,584 |
| Sources of Net Assets | |
| Paid-in capital | $ 1,343,330,474 |
| Accumulated loss | (90,551,890) |
| Net Assets | $1,252,778,584 |
| Class A Shares | |
| Net Assets | $ 335,848,799 |
| Shares Outstanding | 40,125,369 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 8.37 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 8.65 |
| Class C Shares | |
| Net Assets | $ 62,393,119 |
| Shares Outstanding | 8,059,998 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 7.74 |
| Class I Shares | |
| Net Assets | $ 833,507,159 |
| Shares Outstanding | 99,479,114 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 8.38 |
17
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Statement of Assets
and Liabilities (Unaudited) — continued
| July 31, 2022 | |
| Class W Shares | |
| Net Assets | $21,029,507 |
| Shares Outstanding | 2,510,233 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 8.38 |
| On sales of $50,000 or more, the offering price of Class A shares is reduced. | |
| * | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
18
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Statement of
Operations (Unaudited)
| Six Months Ended | |
| July 31, 2022 | |
| Investment Income | |
| Interest income | $ 26,219,907 |
| Total investment income | $ 26,219,907 |
| Expenses | |
| Investment adviser fee | $ 2,821,222 |
| Distribution and service fees: | |
| Class A | 447,308 |
| Class C | 349,982 |
| Trustees’ fees and expenses | 54,250 |
| Custodian fee | 152,558 |
| Transfer and dividend disbursing agent fees | 227,714 |
| Legal and accounting services | 70,307 |
| Printing and postage | 31,149 |
| Registration fees | 56,854 |
| Interest expense and fees | 423,852 |
| Miscellaneous | 66,799 |
| Total expenses | $ 4,701,995 |
| Deduct: | |
| Reimbursement of investment adviser fee — Class W | $ 12,532 |
| Total expense reductions | $ 12,532 |
| Net expenses | $ 4,689,463 |
| Net investment income | $ 21,530,444 |
| Realized and Unrealized Gain (Loss) | |
| Net realized gain (loss): | |
| Investment transactions | $ (46,934,315) |
| Futures contracts | 3,836,248 |
| Net realized loss | $ (43,098,067) |
| Change in unrealized appreciation (depreciation): | |
| Investments | $ (72,047,170) |
| Futures contracts | (1,348,525) |
| Net change in unrealized appreciation (depreciation) | $ (73,395,695) |
| Net realized and unrealized loss | $(116,493,762) |
| Net decrease in net assets from operations | $ (94,963,318) |
19
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Statements of Changes
in Net Assets
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 21,530,444 | $ 49,317,836 |
| Net realized gain (loss) | (43,098,067) | 1,422,237 |
| Net change in unrealized appreciation (depreciation) | (73,395,695) | (49,612,939) |
| Net increase (decrease) in net assets from operations | $ (94,963,318) | $ 1,127,134 |
| Distributions to shareholders: | ||
| Class A | $ (6,321,415) | $ (12,582,413) |
| Class C | (971,917) | (2,056,099) |
| Class I | (17,352,061) | (34,798,742) |
| Class W(1) | (128,400) | (1,745) |
| Total distributions to shareholders | $ (24,773,793) | $ (49,438,999) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (45,975,630) | $ 6,265,917 |
| Class C | (14,142,269) | (12,390,847) |
| Class I | (147,238,604) | 101,468,938 |
| Class W(1) | 20,672,551 | 310,119 |
| Net increase (decrease) in net assets from Fund share transactions | $ (186,683,952) | $ 95,654,127 |
| Net increase (decrease) in net assets | $ (306,421,063) | $ 47,342,262 |
| Net Assets | ||
| At beginning of period | $ 1,559,199,647 | $ 1,511,857,385 |
| At end of period | $1,252,778,584 | $1,559,199,647 |
| (1) | For the period from the commencement of operations, October 1, 2021, to January 31, 2022. |
20
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Financial
Highlights
| Class A | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 9.080 | $ 9.360 | $ 9.380 | $ 8.830 | $ 8.880 | $ 8.650 |
| Income (Loss) From Operations | ||||||
| Net investment income(1) | $ 0.129 | $ 0.281 | $ 0.303 | $ 0.327 | $ 0.345 | $ 0.337 |
| Net realized and unrealized gain (loss) | (0.689) | (0.279) | (0.008) (2) | 0.590 | (0.059) | 0.229 |
| Total income (loss) from operations | $ (0.560) | $ 0.002 | $ 0.295 | $ 0.917 | $ 0.286 | $ 0.566 |
| Less Distributions | ||||||
| From net investment income | $ (0.150) | $ (0.282) | $ (0.315) | $ (0.367) | $ (0.336) | $ (0.336) |
| Total distributions | $ (0.150) | $ (0.282) | $ (0.315) | $ (0.367) | $ (0.336) | $ (0.336) |
| Net asset value — End of period | $ 8.370 | $ 9.080 | $ 9.360 | $ 9.380 | $ 8.830 | $ 8.880 |
| Total Return(3) | (6.18)% (4) | (0.02)% | 3.31% | 10.55% | 3.29% | 6.63% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $335,849 | $412,905 | $419,256 | $427,334 | $350,923 | $344,822 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses excluding interest and fees | 0.77% (5) | 0.73% | 0.76% | 0.76% | 0.79% | 0.78% |
| Interest and fee expense(6) | 0.06% (5) | 0.03% | 0.06% | 0.13% | 0.17% | 0.14% |
| Total expenses | 0.83% (5) | 0.76% | 0.82% | 0.89% | 0.96% | 0.92% |
| Net investment income | 3.06% (5) | 3.01% | 3.35% | 3.57% | 3.92% | 3.81% |
| Portfolio Turnover | 23% (4) | 22% | 54% | 23% | 32% | 21% |
| (1) | Computed using average shares outstanding. |
| (2) | The per share amount is not in accord with the net realized and unrealized gain (loss) for the period because of the timing of Fund share transactions and the amount of the per share realized and unrealized gains and losses at such time. |
| (3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (4) | Not annualized. |
| (5) | Annualized. |
| (6) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H). |
21
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Financial
Highlights — continued
| Class C | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 8.400 | $ 8.660 | $ 8.680 | $ 8.170 | $ 8.210 | $ 8.010 |
| Income (Loss) From Operations | ||||||
| Net investment income(1) | $ 0.090 | $ 0.195 | $ 0.219 | $ 0.239 | $ 0.252 | $ 0.251 |
| Net realized and unrealized gain (loss) | (0.641) | (0.259) | (0.011) (2) | 0.551 | (0.042) | 0.199 |
| Total income (loss) from operations | $ (0.551) | $ (0.064) | $ 0.208 | $ 0.790 | $ 0.210 | $ 0.450 |
| Less Distributions | ||||||
| From net investment income | $ (0.109) | $ (0.196) | $ (0.228) | $ (0.280) | $ (0.250) | $ (0.250) |
| Total distributions | $ (0.109) | $ (0.196) | $ (0.228) | $ (0.280) | $ (0.250) | $ (0.250) |
| Net asset value — End of period | $ 7.740 | $ 8.400 | $ 8.660 | $ 8.680 | $ 8.170 | $ 8.210 |
| Total Return(3) | (6.57)% (4) | (0.78)% | 2.52% | 9.80% | 2.60% | 5.67% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $62,393 | $82,817 | $97,724 | $139,608 | $126,049 | $173,844 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses excluding interest and fees | 1.52% (5) | 1.48% | 1.51% | 1.51% | 1.54% | 1.53% |
| Interest and fee expense(6) | 0.06% (5) | 0.03% | 0.06% | 0.13% | 0.17% | 0.14% |
| Total expenses | 1.58% (5) | 1.51% | 1.57% | 1.64% | 1.71% | 1.67% |
| Net investment income | 2.30% (5) | 2.26% | 2.63% | 2.82% | 3.10% | 3.06% |
| Portfolio Turnover | 23% (4) | 22% | 54% | 23% | 32% | 21% |
| (1) | Computed using average shares outstanding. |
| (2) | The per share amount is not in accord with the net realized and unrealized gain (loss) for the period because of the timing of Fund share transactions and the amount of the per share realized and unrealized gains and losses at such time. |
| (3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (4) | Not annualized. |
| (5) | Annualized. |
| (6) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H). |
22
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Financial
Highlights — continued
| Class I | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 9.090 | $ 9.370 | $ 9.390 | $ 8.840 | $ 8.880 | $ 8.660 |
| Income (Loss) From Operations | ||||||
| Net investment income(1) | $ 0.140 | $ 0.304 | $ 0.326 | $ 0.349 | $ 0.364 | $ 0.359 |
| Net realized and unrealized gain (loss) | (0.690) | (0.279) | (0.009) (2) | 0.590 | (0.046) | 0.220 |
| Total income (loss) from operations | $ (0.550) | $ 0.025 | $ 0.317 | $ 0.939 | $ 0.318 | $ 0.579 |
| Less Distributions | ||||||
| From net investment income | $ (0.160) | $ (0.305) | $ (0.337) | $ (0.389) | $ (0.358) | $ (0.359) |
| Total distributions | $ (0.160) | $ (0.305) | $ (0.337) | $ (0.389) | $ (0.358) | $ (0.359) |
| Net asset value — End of period | $ 8.380 | $ 9.090 | $ 9.370 | $ 9.390 | $ 8.840 | $ 8.880 |
| Total Return(3) | (6.06)% (4) | 0.24% | 3.57% | 10.81% | 3.67% | 6.77% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $833,507 | $1,063,175 | $994,877 | $878,062 | $656,830 | $682,157 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses excluding interest and fees | 0.52% (5) | 0.48% | 0.51% | 0.51% | 0.54% | 0.53% |
| Interest and fee expense(6) | 0.06% (5) | 0.03% | 0.06% | 0.13% | 0.17% | 0.14% |
| Total expenses | 0.58% (5) | 0.51% | 0.57% | 0.64% | 0.71% | 0.67% |
| Net investment income | 3.31% (5) | 3.25% | 3.59% | 3.81% | 4.13% | 4.04% |
| Portfolio Turnover | 23% (4) | 22% | 54% | 23% | 32% | 21% |
| (1) | Computed using average shares outstanding. |
| (2) | The per share amount is not in accord with the net realized and unrealized gain (loss) for the period because of the timing of Fund share transactions and the amount of the per share realized and unrealized gains and losses at such time. |
| (3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (4) | Not annualized. |
| (5) | Annualized. |
| (6) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H). |
23
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Financial
Highlights — continued
| Class W | ||
| Six
Months Ended July 31, 2022 (Unaudited) |
Period
Ended January 31, 2022(1) | |
| Net asset value — Beginning of period | $ 9.090 | $ 9.320 |
| Income (Loss) From Operations | ||
| Net investment income(2) | $ 0.155 | $ 0.105 |
| Net realized and unrealized loss | (0.686) | (0.224) |
| Total loss from operations | $ (0.531) | $(0.119) |
| Less Distributions | ||
| From net investment income | $ (0.179) | $ (0.111) |
| Total distributions | $ (0.179) | $(0.111) |
| Net asset value — End of period | $ 8.380 | $ 9.090 |
| Total Return(3)(4) | (5.85)% (5) | (1.30)% (5) |
| Ratios/Supplemental Data | ||
| Net assets, end of period (000’s omitted) | $21,030 | $ 302 |
| Ratios (as a percentage of average daily net assets): | ||
| Expenses excluding interest and fees(4) | 0.10% (6) | 0.06% (6) |
| Interest and fee expense(7) | 0.06% (6) | 0.03% (6) |
| Total expenses | 0.16% (6) | 0.09% (6) |
| Net investment income | 3.75% (6) | 3.34% (6) |
| Portfolio Turnover | 23% (5) | 22% (8) |
| (1) | For the period from the commencement of operations, October 1, 2021, to January 31, 2022. |
| (2) | Computed using average shares outstanding. |
| (3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (4) | The investment adviser reimbursed the total amount of the advisory fees paid (equal to 0.42% and 0.37% of average daily net assets for the six months ended July 31, 2022 and the period ended January 31, 2022, respectively). Absent this reimbursement, total return would be lower. |
| (5) | Not annualized. |
| (6) | Annualized. |
| (7) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H). |
| (8) | For the year ended January 31, 2022. |
24
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance High Yield Municipal Income Fund (the Fund) is a
diversified series of Eaton Vance Municipals Trust II (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund
seeks to provide high current income exempt from regular federal income tax. The Fund primarily invests in high yield municipal obligations with maturities of ten years or more. The Fund offers four classes of shares. Class A shares are generally
sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Effective November 5, 2020, Class C shares automatically convert to
Class A shares eight years after their purchase as described in the Fund’s prospectus. Class I and Class W shares are sold at net asset value and are not subject to a sales charge. Class W shares are available for purchase only at the
direction of the investment adviser or one of its affiliates on behalf of investors that are eligible clients of the investment adviser or its affiliates that have entered into a separate investment management or advisory agreement pursuant to which
such clients pay an investment management or advisory fee, including investment vehicles that are sponsored, managed, advised or sub-advised by the investment adviser or its affiliates. Each class represents a pro-rata interest in the Fund, but
votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses are allocated daily to each class of shares based on the relative net assets of each class to the total net
assets of the Fund. Net investment income, other than class-specific expenses, is allocated daily to each class of shares based upon the ratio of the value of each class’s paid shares to the total value of all paid shares. Each class of shares
differs in its distribution plan and certain other class-specific expenses.
The following is a summary of significant accounting policies
of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting
Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment
Valuation—The following methodologies are used to determine the market value or fair value of
investments.
Debt Obligations. Debt obligations 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 ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, 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 debt obligations purchased with a
remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Derivatives. Futures contracts
are valued at the closing settlement price established by the board of trade or exchange on which they are traded.
Fair Valuation. 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 the Fund in a manner that most fairly reflects the
security’s “fair value”, which is 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 companies or 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 company’s or entity’s financial statements, 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—The 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. The Fund intends to satisfy conditions which will enable it to designate distributions from the interest income generated by its investments in non-taxable municipal securities, which are exempt from
regular federal income tax when received by the Fund, as exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to
shareholders.
As of July 31, 2022, the Fund had no
uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue
Service for a period of three years from the date of filing.
D Expenses—The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific
fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
25
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
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 U.S. GAAP 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 the Trust’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal
liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume, upon request by the
shareholder, 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, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
H Floating Rate Notes Issued in Conjunction with
Securities Held—The Fund may invest in residual interest bonds, also referred to as inverse floating
rate securities, whereby the Fund may sell a variable or fixed rate bond for cash to a Special-Purpose Vehicle (the SPV), (which is generally organized as a trust), while at the same time, buying a residual interest in the assets and cash flows of
the SPV. The bond is deposited into the SPV with the same CUSIP number as the bond sold to the SPV 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 the 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 Bond held by
the SPV transferred to the Fund, thereby terminating the SPV. Should the Fund exercise such right, it would generally pay the SPV 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 Fund accounts for the transaction described above as a secured borrowing by including the Bond in its Portfolio of
Investments and the Floating Rate Notes as a liability under the caption “Payable for floating rate notes issued” in its 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 SPV for redemption at par at each reset date. Accordingly, the fair value of the payable for floating rate notes issued approximates its carrying value. If measured at fair value, the
payable for floating rate notes would have been considered as Level 2 in the fair value hierarchy (see Note 10) at July 31, 2022. Interest expense related to the Fund’s 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 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. At July 31, 2022, the amount of the Fund’s Floating Rate Notes outstanding and the related collateral were $63,829,827 and $89,530,802, respectively. The range of interest rates on the Floating Rate
Notes outstanding at July 31, 2022 was 1.36% to 1.48%. For the six months ended July 31, 2022, the Fund’s average settled Floating Rate Notes outstanding and the average interest rate (annualized) including fees were $73,286,464 and 1.17%,
respectively.
In certain circumstances, the Fund
may enter into shortfall and forbearance agreements with brokers by which the Fund agrees to reimburse the broker 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 Fund had no shortfalls as of July 31, 2022.
The Fund may also purchase residual interest bonds 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 Fund’s 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 Fund’s investment policies do not allow the Fund to borrow money except as permitted by the 1940 Act. Management believes that the Fund’s 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 Fund’s 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 Fund’s restrictions apply. Residual interest bonds held by the Fund are securities exempt from registration under Rule 144A of the Securities Act of 1933.
I Futures
Contracts—Upon entering into a futures contract, the Fund is required to deposit with the broker,
either in cash or securities, an amount equal to a certain percentage of the contract amount (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 futures contracts. Should market conditions change unexpectedly, the Fund may not
achieve the
26
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
anticipated benefits
of the 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 When-Issued Securities and Delayed Delivery
Transactions—The Fund may purchase 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 Fund maintains cash and/or 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. Such
security purchases are subject to the risk that when delivered they will be worth less than the agreed upon payment price. Losses may also arise if the counterparty does not perform under the contract.
K Interim Financial Statements—The interim financial statements relating to July 31, 2022 and for the six months then ended have not been
audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Distributions to
Shareholders and Income Tax Information
The net
investment income of the Fund is determined daily and substantially all of the net investment income so determined is declared as a dividend to shareholders of record at the time of declaration. Distributions are declared separately for each class
of shares. Distributions are paid monthly. Distributions of realized capital gains are made at least annually. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value
as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP,
only distributions in excess of tax basis earnings and profits are 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.
At January 31, 2022, the Fund, for federal income tax purposes,
had deferred capital losses of $51,887,792 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of
distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year and
retain the same short-term or long-term character as when originally deferred. Of the deferred capital losses at January 31, 2022, $17,355,393 are short-term and $34,532,399 are long-term.
The cost and unrealized appreciation (depreciation) of
investments, including open derivative contracts, of the Fund at July 31, 2022, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $1,255,781,487 |
| Gross unrealized appreciation | $ 37,920,674 |
| Gross unrealized depreciation | (33,117,760) |
| Net unrealized appreciation | $ 4,802,914 |
27
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
3 Investment Adviser Fee and Other Transactions
with Affiliates
The investment adviser fee is earned by
Boston Management and Research (BMR), an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory services rendered to the Fund. The fee is based upon a percentage of the Fund's total daily net assets plus a
percentage of total daily gross income (i.e., income other than gains from the sale of securities) as follows and is payable monthly:
| Total Daily Net Assets | Annual
Asset Rate |
Total Daily Net Assets | Daily
Income Rate |
| Up to $500 million | 0.3150% | Up to $500 million | 3.1500% |
| $500 million but less than $750 million | 0.2925% | $500 million but less than $1 billion | 2.9250% |
| $750 million but less than $1.5 billion | 0.2700% | $1 billion but less than $1.5 billion | 2.7000% |
| $1.5 billion but less than $2 billion | 0.2475% | $1.5 billion but less than $2 billion | 2.4750% |
| $2 billion but less than $3 billion | 0.2250% | $2 billion but less than $3 billion | 2.2500% |
| $3 billion and over | 0.2025% | $3 billion and over | 2.0250% |
For the six months ended July 31,
2022, the investment adviser fee amounted to $2,821,222 or 0.42% (annualized) of the Fund’s average daily net assets.
BMR has agreed to reimburse the total amount of advisory fees
paid by Class W shares. This agreement may be changed or terminated after May 31, 2024. Pursuant to this agreement, BMR was allocated $12,532 of the advisory fees paid by Class W shares for the six months ended July 31, 2022.
Eaton Vance Management (EVM), an affiliate of BMR and an
indirect, wholly-owned subsidiary of Morgan Stanley, serves as the administrator of the Fund, but receives no compensation. EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services
Agreement. For the six months ended July 31, 2022, EVM earned $9,715 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance
Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $25,451 as its portion of the sales charge on sales of Class A shares for the six months ended July 31, 2022. The Fund was informed that Morgan
Stanley affiliated broker-dealers, which may be deemed to be affiliates of EVM, BMR and EVD, also received a portion of the sales charge on sales of Class A shares for the six months ended July 31, 2022 in the amount of $5,391. EVD also received
distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of
EVM’s or BMR’s organization receive remuneration for their services to the Fund out of the investment adviser and administration fee. Trustees of the Fund who are not affiliated with EVM may elect to defer receipt of all or a percentage
of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended July 31, 2022, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of the above
organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares
(Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and
facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended July 31, 2022 amounted to $447,308 for Class A
shares.
The Fund also has in effect a distribution plan
for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing
distribution services and facilities to the Fund. For the six months ended July 31, 2022, the Fund paid or accrued to EVD $262,486 for Class C shares.
Pursuant to the Class C Plan, the Fund also makes payments of
service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to Class C shares. Service fees paid or accrued are for personal services and/or the maintenance of
shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended July 31, 2022 amounted to $87,496 for Class C shares.
Distribution and service fees are subject to the limitations
contained in the Financial Industry Regulatory Authority Rule 2341(d).
28
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is
imposed on redemptions of Class C shares made within 12 months of purchase. Class A shares may be subject to a 0.75% (1% prior to April 29, 2022) CDSC if redeemed within 12 months (18 months prior to April 29, 2022) of purchase (depending on the
circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six
months ended July 31, 2022, the Fund was informed that EVD received approximately $34,000 and $2,000 of CDSCs paid by Class A and Class C shareholders, respectively.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term
obligations, aggregated $332,085,516 and $469,964,714, respectively, for the six months ended July 31, 2022.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022(1) | ||||
| Shares | Amount | Shares | Amount | ||
| Class A | |||||
| Sales | 3,528,916 | $ 29,630,567 | 6,578,951 | $ 61,544,294 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 600,921 | 5,102,899 | 1,074,501 | 10,007,784 | |
| Redemptions | (10,095,752) | (86,104,117) | (7,522,378) | (70,258,658) | |
| Converted from Class C shares | 630,711 | 5,395,021 | 532,706 | 4,972,497 | |
| Net increase (decrease) | (5,335,204) | $ (45,975,630) | 663,780 | $ 6,265,917 | |
| Class C | |||||
| Sales | 370,514 | $ 2,899,897 | 1,266,760 | $ 10,948,395 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 111,181 | 873,585 | 214,231 | 1,845,479 | |
| Redemptions | (1,598,660) | (12,520,730) | (2,336,171) | (20,212,224) | |
| Converted to Class A shares | (681,912) | (5,395,021) | (575,943) | (4,972,497) | |
| Net decrease | (1,798,877) | $ (14,142,269) | (1,431,123) | $ (12,390,847) | |
| Class I | |||||
| Sales | 32,031,039 | $ 270,056,527 | 39,654,609 | $ 371,004,093 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 1,741,352 | 14,819,945 | 3,253,997 | 30,339,525 | |
| Redemptions | (51,228,168) | (432,115,076) | (32,166,004) | (299,874,680) | |
| Net increase (decrease) | (17,455,777) | $(147,238,604) | 10,742,602 | $ 101,468,938 | |
29
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022(1) | ||||
| Shares | Amount | Shares | Amount | ||
| Class W | |||||
| Sales | 2,563,271 | $ 21,381,576 | 33,158 | $ 310,000 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 14,700 | 122,645 | 13 | 119 | |
| Redemptions | (100,909) | (831,670) | — | — | |
| Net increase | 2,477,062 | $ 20,672,551 | 33,171 | $ 310,119 | |
| (1) | For Class W, for the period from the commencement of operations, October 1, 2021, to January 31, 2022. |
8 Line of Credit
The Fund participates with other portfolios and funds managed
by EVM and its affiliates in an $800 million unsecured line of credit agreement with a group of banks, which is in effect through October 25, 2022. Borrowings are made by the Fund solely for temporary purposes related to redemptions and other
short-term cash needs. Interest is charged to the Fund based on its borrowings at an amount above either the Secured Overnight Financing Rate (SOFR) or Federal Funds rate. In addition, a fee computed at an annual rate of 0.15% on the daily unused
portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. In connection with the renewal of the agreement in October 2021, an upfront fee and arrangement fee totaling $150,000 was incurred
that was allocated to the participating portfolios and funds. Because the line of credit is not available exclusively to the Fund, it may be unable to borrow some or all of its requested amounts at any particular time. The Fund did not have any
significant borrowings or allocated fees during the six months ended July 31, 2022.
9 Financial Instruments
The Fund may trade in financial instruments with off-balance
sheet risk in the normal course of its investing activities. These financial instruments may include futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The
notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and offsetting transactions are considered. A summary of obligations under these financial instruments at July 31, 2022 is included in the Portfolio of Investments. At July 31,
2022, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
The Fund is subject to interest rate risk in the normal course
of pursuing its investment objective. Because the Fund holds fixed-rate bonds, the value of these bonds may decrease if interest rates rise. The Fund enters into U.S. Treasury futures contracts to hedge against changes in interest rates.
The fair value 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 July 31, 2022 was as follows:
| Fair Value | ||
| Derivative | Asset Derivative | Liability Derivative(1) |
| Futures contracts | $ — | $(857,862) |
| (1) | 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 on open futures contracts, as applicable. |
30
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
The
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is interest rate risk for the six months ended July 31, 2022 was
as follows:
| Derivative | Realized
Gain (Loss) on Derivatives Recognized in Income(1) |
Change
in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income(2) |
| Futures contracts | $3,836,248 | $(1,348,525) |
| (1) | Statement of Operations location: Net realized gain (loss): Futures contracts. |
| (2) | Statement of Operations location: Change in unrealized appreciation (depreciation): Futures contracts. |
The average notional cost of futures contracts (short)
outstanding during the six months ended July 31, 2022, which is indicative of the volume of this derivatives type, was approximately $38,261,000.
10 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.
At July 31, 2022, the hierarchy of inputs used in valuing the
Fund's investments and open derivative instruments, which are carried at value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Corporate Bonds | $ — | $ 25,983,437 | $ — | $ 25,983,437 |
| Tax-Exempt Municipal Obligations | — | 1,231,503,095 | — | 1,231,503,095 |
| Taxable Municipal Obligations | — | 67,785,558 | — | 67,785,558 |
| Total Investments | $ — | $1,325,272,090 | $ — | $ 1,325,272,090 |
| Liability Description | ||||
| Futures Contracts | $ (857,862) | $ — | $ — | $ (857,862) |
| Total | $ (857,862) | $ — | $ — | $ (857,862) |
11 Risks and Uncertainties
Pandemic Risk
An outbreak of respiratory disease caused by a novel
coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines,
cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and
economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and industries, and could continue to affect the market
in significant and unforeseen ways. Other epidemics and pandemics that may arise in the future may have similar effects. Any such impact could adversely affect the Fund's performance, or the performance of the securities in which the Fund
invests.
31
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
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 the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year only if its continuation is approved on an annual basis by a vote of the fund’s
board of trustees, including 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 held on June 8, 2022, the Boards of
Trustees/Directors (collectively, the “Board”) that oversee the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the “Eaton Vance Funds”), including a
majority of the independent trustees (the “Independent Trustees”), voted to approve the continuation of existing investment advisory agreements and sub-advisory
agreements1 for each of the Eaton Vance Funds for an additional one-year period. The Board relied upon the affirmative recommendation of its Contract Review Committee, which is
a committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including information
specifically requested by the Board) for a series of formal meetings held between April and June 2022. Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees, to the extent
such information was relevant to the Contract Review Committee’s annual evaluation of the investment advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory
agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable to all or groups of Eaton Vance Funds, which is referenced immediately below, and information
applicable to the particular Eaton Vance Fund covered by this report (additional fund-specific information is referenced below under “Results of the Contract Review Process”). (For funds that invest through one or more underlying
portfolios, references to “each fund” in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
• A report from an independent
data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the independent data provider (“comparable funds”);
• A report from an independent
data provider comparing each fund’s total expense ratio (and its components) to those of comparable funds;
• A report from an independent
data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices,
over various time periods;
• In certain instances, data
regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in consultation with the Portfolio Management Committee of the Board (a committee exclusively comprised of Independent
Trustees);
• Comparative
information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in managing other accounts (which may include other mutual funds, collective investment funds and institutional accounts) using investment
strategies and techniques similar to those used in managing such fund(s), if any;
• Profitability analyses with
respect to the adviser and sub-adviser to each of the funds;
Information about Portfolio Management and Trading
• Descriptions of the investment
management services provided to each fund, as well as each of the funds’ investment strategies and policies;
• The procedures and processes
used to determine the value of fund assets, including, when necessary, the determination of “fair value” and actions taken to monitor and test the effectiveness of such procedures and processes;
• Information about the policies
and practices of each fund’s adviser and sub-adviser with respect to trading, including their processes for seeking best execution of portfolio transactions;
• Information about the
allocation of brokerage transactions and the benefits, if any, received by the adviser and sub-adviser to each fund as a result of brokerage allocation, including, as applicable, information concerning the acquisition of research through client
commission arrangements and policies with respect to “soft dollars”;
• Data relating to the portfolio
turnover rate of each fund and related information regarding active management in the context of particular strategies;
Information about each Adviser and Sub-adviser
• Reports detailing the
financial results and condition of the adviser and sub-adviser to each fund;
• Information regarding the
individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for portfolio managers and certain other investment professionals, information relating to their responsibilities
with respect to managing other mutual funds and investment accounts, as applicable;
1 Not all Eaton Vance Funds have entered into a sub-advisory agreement with a sub-adviser. Accordingly,
references to “sub-adviser” or “sub-advisory agreement” in this “Overview” section may not be applicable to the particular Eaton Vance Fund covered by this report. Following the “Overview” section,
further information regarding the Board’s evaluation of a fund’s contractual arrangements is included under the “Results of the Contract Review Process” section.
32
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Board of
Trustees’ Contract Approval — continued
• Information regarding the
adviser’s and its parent company’s (Morgan Stanley’s) efforts to retain and attract talented investment professionals, including in the context of a particularly competitive marketplace for talent, as well as the ongoing unique
environment presented by hybrid, remote and other alternative work arrangements;
• The Code of Ethics of the
adviser and its affiliates and the sub-adviser of each fund, together with information relating to compliance with, and the administration of, such codes;
• Policies and procedures
relating to proxy voting, including regular reporting with respect to fund proxy voting activities;
• Information regarding the
handling of corporate actions and class actions, as well as information regarding litigation and other regulatory matters;
• Information concerning the
resources devoted to compliance efforts undertaken by the adviser and its affiliates and the sub-adviser of each fund, if any, including descriptions of their various compliance programs and their record of compliance;
• Information concerning the
business continuity and disaster recovery plans of the adviser and its affiliates and the sub-adviser of each fund, if any;
• A description of Eaton Vance
Management’s and Boston Management and Research’s oversight of sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;
Other Relevant Information
• Information regarding
ongoing initiatives to further integrate and harmonize, where applicable, the investment management and other departments of the adviser and its affiliates with the overall investment management infrastructure of Morgan Stanley, in light of Morgan
Stanley’s acquisition of Eaton Vance on March 1, 2021;
• Information concerning the
nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates;
• Information concerning
oversight of the relationship with the custodian, subcustodians, fund accountants, and other third-party service providers by the adviser and/or administrator to each of the funds;
• Information concerning efforts
to implement policies and procedures with respect to various new regulations applicable to the funds, including Rule 12d1-4 (the Fund-of-Funds Rule), Rule 18f-4 (the Derivatives Rule) and Rule 2a-5 (the Fair Valuation Rule);
• For an Eaton Vance Fund
structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where relevant, the closed-end fund’s market prices (including as compared to the closed-end fund’s net
asset value (NAV)), trading volume data, continued use of auction preferred shares (where applicable), distribution rates and other relevant matters;
• The risks which the adviser
and/or its affiliates incur in connection with the management and operation of the funds, including, among others, litigation, regulatory, entrepreneurial, and other business risks (and the associated costs of such risks); and
• The terms of each investment
advisory agreement and sub-advisory agreement.
During the
various meetings of the Board and its committees over the course of the year leading up to the June 8, 2022 meeting, the Trustees received information from portfolio managers and other investment professionals of the advisers and sub-advisers of the
funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing the funds’ investment objectives. The Trustees also received information regarding risk management techniques
employed in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and
received and participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board and its committees, the
Independent Trustees held regular teleconferences to discuss, among other topics, matters relating to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review Committee was advised throughout the
contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee, with the advice of such counsel, exercised their own business judgment in determining the material
factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory agreement 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 investment advisory agreement and sub-advisory agreement. In evaluating each investment advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the
Contract Review Committee were also informed by multiple years of analysis and discussion with the adviser and sub-adviser to each of the Eaton Vance Funds.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other
information it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement between Eaton Vance High Yield Municipal Income Fund (the
“Fund”) and Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, recommended to the Board approval of the agreement. Based on the recommendation of
the Contract Review Committee, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Fund.
33
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Board of
Trustees’ Contract Approval — continued
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory
agreement for the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser.
The Board considered the Adviser’s management
capabilities and investment processes in light of the types of investments held by the Fund, including the education, experience and number of investment professionals and other personnel who provide portfolio management, investment research, and
similar services to the Fund, including recent changes to such personnel. In particular, the Board considered, where relevant, the abilities and experience of the Adviser’s investment professionals in analyzing factors such as credit risk, tax
efficiency, and special considerations relevant to investing in municipal bonds. The Board considered the Adviser’s municipal bond team, which includes investment professionals and credit specialists who provide services to the Fund. The Board
also took into account the resources dedicated to portfolio management and other services, the compensation methods of the Adviser and other factors, including the reputation and resources of the Adviser to recruit and retain highly qualified
research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the infrastructure, operational capabilities
and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates
may be subject in managing the Fund.
The Board considered
the compliance programs of the Adviser and relevant affiliates thereof. The Board considered compliance and reporting matters regarding, among other things, personal trading by investment professionals, disclosure of portfolio holdings, late
trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered 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 other administrative services provided or
overseen 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 fund complex offering exposure to a variety
of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
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.
Fund Performance
The Board compared the Fund’s investment performance to
that of comparable funds identified by an independent data provider (the peer group), as well as an appropriate benchmark index, and assessed the Fund’s performance on the basis of total return and current income return. The Board’s
review included comparative performance data with respect to the Fund for the one-, three-, five- and ten-year periods ended December 31, 2021. In this regard, the Board noted that the performance of the Fund was lower than the median performance of
the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was higher than its benchmark index for the three-year period. The Board considered, among other things, the Adviser’s efforts to
generate competitive levels of tax exempt current income over time through investments that, relative to its comparable funds, focus on high yield municipal bonds with longer maturities. In addition, the Board considered that, in response to
inquiries from the Contract Review Committee, the Fund’s performance record had improved relative to its peers in more recent periods. On the basis of the foregoing, including the performance of the Fund over other periods, and other relevant
information provided by the Adviser in response to inquiries from the Contract Review Committee, the Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund
for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one-year period ended December 31,
2021, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on the Fund’s total expense ratio relative to
comparable funds.
After considering the foregoing
information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and “Fall-Out” Benefits
The Board considered the level of profits realized by the
Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other
payments by the Adviser and its affiliates to third parties in respect of distribution or other services.
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 deemed not to be excessive.
34
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Board of
Trustees’ Contract Approval — continued
The
Board also considered direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their respective relationships with the Fund, including the benefits of research services that may be available to the Adviser
as a result of securities transactions effected for the Fund and other investment advisory clients.
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 the 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 economies of scale, if any, 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 the 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 the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon
the foregoing, the Board concluded that the Fund currently shares in the benefits from economies of scale, if any, when they are realized by the Adviser. The Board also concluded that the structure of the advisory fee, which includes breakpoints at
several asset levels, will allow the Fund to continue to benefit from any economies of scale in the future.
35
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Liquidity Risk
Management Program
The
Fund has implemented a written liquidity risk management program (Program) and related procedures to manage its liquidity in accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (Liquidity Rule). The Liquidity Rule defines
“liquidity risk” as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of the remaining investors’ interests in the fund. The Fund’s Board of Trustees/Directors has
designated the investment adviser to serve as the administrator of the Program and the related procedures. The administrator has established a Liquidity Risk Management Oversight Committee (Committee) to perform the functions necessary to administer
the Program. As part of the Program, the administrator is responsible for identifying illiquid investments and categorizing the relative liquidity of the Fund’s investments in accordance with the Liquidity Rule. Under the Program, the
administrator assesses, manages, and periodically reviews the Fund’s liquidity risk, and is responsible for making certain reports to the Fund’s Board of Trustees/Directors and the Securities and Exchange Commission (SEC) regarding the
liquidity of the Fund’s investments, and to notify the Board of Trustees/Directors and the SEC of certain liquidity events specified in the Liquidity Rule. The liquidity of the Fund’s portfolio investments is determined based on a number
of factors including, but not limited to, relevant market, trading and investment-specific considerations under the Program.
At a meeting of the Fund’s Board of Trustees/Directors on
June 7, 2022, the Committee provided a written report to the Fund’s Board of Trustees/Directors pertaining to the operation, adequacy, and effectiveness of implementation of the Program, as well as the operation of the highly liquid investment
minimum (if applicable) for the period January 1, 2021 through December 31, 2021 (Review Period). The Program operated effectively during the Review Period, supporting the administrator’s ability to assess, manage and monitor Fund liquidity
risk, including during periods of market volatility and net redemptions. During the Review Period, the Fund met redemption requests on a timely basis.
There can be no assurance that the Program will achieve its
objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
36
Eaton Vance
High Yield Municipal Income Fund
July 31, 2022
Officers and
Trustees
| Officers | |
| Eric
A. Stein President |
Jill R.
Damon Secretary |
| Deidre
E. Walsh Vice President and Chief Legal Officer |
Richard F.
Froio Chief Compliance Officer |
| James
F. Kirchner Treasurer |
|
| Trustees |
| * | Interested Trustee |
| ** | Mr. Bowser and Ms. Wiser began serving as Trustees effective April 4, 2022. |
37
Eaton Vance Funds
| Privacy Notice | April 2021 |
| FACTS | WHAT
DOES EATON VANCE DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The
types of personal information we collect and share depend on the product or service you have with us. This information can include:■ Social Security number and income ■ investment experience and risk tolerance ■ checking account number and wire transfer instructions |
| How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Eaton Vance chooses to share; and whether you can limit this sharing. |
| Reasons
we can share your personal information |
Does
Eaton Vance share? |
Can
you limit this sharing? |
| For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
| For our marketing purposes — to offer our products and services to you | Yes | No |
| For joint marketing with other financial companies | No | We don’t share |
| For our investment management affiliates’ everyday business purposes — information about your transactions, experiences, and creditworthiness | Yes | Yes |
| For our affiliates’ everyday business purposes — information about your transactions and experiences | Yes | No |
| For our affiliates’ everyday business purposes — information about your creditworthiness | No | We don’t share |
| For our investment management affiliates to market to you | Yes | Yes |
| For our affiliates to market to you | No | We don’t share |
| For nonaffiliates to market to you | No | We don’t share |
| To
limit our sharing |
Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.comPlease note:If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
| Questions? | Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.com |
38
Eaton Vance Funds
| Privacy Notice — continued | April 2021 |
Page 2
| Who we are | |
| Who is providing this notice? | Eaton Vance Management, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd., Eaton Vance Global Advisors Limited, Eaton Vance Management’s Real Estate Investment Group, Boston Management and Research, Calvert Research and Management, Eaton Vance and Calvert Fund Families and our investment advisory affiliates (“Eaton Vance”) (see Investment Management Affiliates definition below) |
| What we do | |
| How
does Eaton Vance protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information. |
| How
does Eaton Vance collect my personal information? |
We
collect your personal information, for example, when you■ open an account or make deposits or withdrawals from your account ■ buy securities from us or make a wire transfer ■ give us your contact informationWe also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can’t I limit all sharing? | Federal
law gives you the right to limit only■ sharing for affiliates’ everyday business purposes — information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to youState laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
| Definitions | |
| Investment
Management Affiliates |
Eaton Vance Investment Management Affiliates include registered investment advisers, registered broker- dealers, and registered and unregistered funds. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.■ Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.■ Eaton Vance does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.■ Eaton Vance doesn’t jointly market. |
| Other important information | |
| Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Nonaffiliates unless you provide us with your written consent to share such information.California: Except as permitted by law, we will not share personal information we collect about California residents with Nonaffiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us. | |
39
Eaton Vance Funds
IMPORTANT NOTICES
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 intermediary, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial intermediary, 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 intermediary. Your instructions that householding not apply
to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial intermediary.
Portfolio
Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) files a schedule of portfolio holdings on Part F to Form N-PORT with the
SEC. Certain information filed on Form N-PORT may be viewed 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.
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.
40
* FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the
professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to
investors at www.FINRA.org.
Parametric
TABS Municipal Bond Funds
Semiannual Report
July 31, 2022
Commodity Futures Trading Commission Registration. The Commodity Futures Trading Commission (“CFTC”) has adopted regulations that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a
prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The investment adviser has claimed an exclusion
from the definition of “commodity pool operator” under the Commodity Exchange Act with respect to its management of each Fund. Accordingly, neither the Funds nor the adviser with respect to the operation of the Funds is subject to CFTC
regulation. Because of its management of other strategies, the Funds' adviser and Parametric Portfolio Associates LLC (Parametric), sub-adviser to the Funds, are registered with the CFTC as commodity pool operators. The adviser and Parametric are
also registered as commodity trading advisors.
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.
This report must be preceded or accompanied by a current
summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and
prospectus, which can be obtained from a financial intermediary. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-260-0761.
Semiannual Report July 31, 2022
Parametric
TABS Municipal Bond Funds
Parametric
TABS Short-Term Municipal Bond Fund
July 31, 2022
Performance
Portfolio Manager(s) Brian C.
Barney, CFA, Devin J. Cooch, CFA and Alison Wagner, CFA, each of Parametric Portfolio Associates LLC
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
Six Months | One Year | Five Years | Ten Years |
| Class A at NAV | 03/27/2009 | 12/31/1998 | (2.34)% | (4.85)% | 0.97% | 1.03% |
| Class A with 3.25% Maximum Sales Charge | — | — | (5.50) | (7.91) | 0.31 | 0.70 |
| Class C at NAV | 03/27/2009 | 12/31/1998 | (2.69) | (5.54) | 0.22 | 0.42 |
| Class C with 1% Maximum Sales Charge | — | — | (3.67) | (6.48) | 0.22 | 0.42 |
| Class I at NAV | 03/27/2009 | 12/31/1998 | (2.21) | (4.61) | 1.20 | 1.28 |
|
| ||||||
| Bloomberg Municipal Managed Money 1–7 Year Bond Index | — | — | (1.00)% | (3.73)% | 1.12% | 1.38% |
| Bloomberg 5 Year Municipal Bond Index | — | — | (1.39) | (4.25) | 1.39 | 1.72 |
| % After-Tax Returns with Maximum Sales Charge | Class
Inception Date |
Performance
Inception Date |
One Year | Five Years | Ten Years |
| Class A After Taxes on Distributions | 03/27/2009 | 12/31/1998 | (8.11)% | 0.13% | 0.53% |
| Class A After Taxes on Distributions and Sale of Fund Shares | — | — | (4.38) | 0.39 | 0.72 |
| Class C After Taxes on Distributions | 03/27/2009 | 12/31/1998 | (6.66) | 0.05 | 0.25 |
| Class C After Taxes on Distributions and Sale of Fund Shares | — | — | (3.77) | 0.20 | 0.39 |
| Class I After Taxes on Distributions | 03/27/2009 | 12/31/1998 | (4.82) | 1.02 | 1.09 |
| Class I After Taxes on Distributions and Sale of Fund Shares | — | — | (2.32) | 1.16 | 1.22 |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| 0.70% | 1.45% | 0.45% |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 1.29% | —% | 1.54% |
| SEC 30-day Yield | 1.24 | 0.55 | 1.53 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to
pay on Fund distributions or upon the redemption of Fund shares. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance for periods less than or equal to
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
eatonvance.com.
2
Parametric
TABS Short-Term Municipal Bond Fund
July 31, 2022
Fund Profile
| Credit Quality (% of total investments)* |
| * | For purposes of the Fund’s rating restrictions, ratings are based on Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), as applicable. If securities are rated differently by the ratings agencies, the highest rating is applied. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by S&P or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality. Credit ratings are based largely on the ratings agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and 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. Holdings designated as “Not Rated” (if any) are not rated by the national ratings agencies stated above. |
3
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Performance
Portfolio Manager(s) Brian C.
Barney, CFA, Devin J. Cooch, CFA and Alison Wagner, CFA, each of Parametric Portfolio Associates LLC
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
Six Months | One Year | Five Years | Ten Years |
| Class A at NAV | 02/01/2010 | 02/01/2010 | (3.63)% | (7.02)% | 1.16% | 1.90% |
| Class A with 3.25% Maximum Sales Charge | — | — | (6.77) | (10.05) | 0.49 | 1.57 |
| Class C at NAV | 02/01/2010 | 02/01/2010 | (3.99) | (7.80) | 0.41 | 1.29 |
| Class C with 1% Maximum Sales Charge | — | — | (4.95) | (8.71) | 0.41 | 1.29 |
| Class I at NAV | 02/01/2010 | 02/01/2010 | (3.51) | (6.86) | 1.42 | 2.16 |
|
| ||||||
| Bloomberg Municipal Managed Money Intermediate 1–17 Year Bond Index | — | — | (2.93)% | (6.36)% | 1.68% | 2.18% |
| Bloomberg 7 Year Municipal Bond Index | — | — | (1.90) | (5.18) | 1.72 | 2.23 |
| % After-Tax Returns with Maximum Sales Charge | Class
Inception Date |
Performance
Inception Date |
One Year | Five Years | Ten Years |
| Class A After Taxes on Distributions | 02/01/2010 | 02/01/2010 | (10.21)% | 0.40% | 1.46% |
| Class A After Taxes on Distributions and Sale of Fund Shares | — | — | (5.50) | 0.68 | 1.52 |
| Class C After Taxes on Distributions | 02/01/2010 | 02/01/2010 | (8.84) | 0.32 | 1.18 |
| Class C After Taxes on Distributions and Sale of Fund Shares | — | — | (4.96) | 0.48 | 1.19 |
| Class I After Taxes on Distributions | 02/01/2010 | 02/01/2010 | (7.02) | 1.31 | 2.04 |
| Class I After Taxes on Distributions and Sale of Fund Shares | — | — | (3.51) | 1.47 | 2.05 |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 0.92% | 1.67% | 0.67% |
| Net | 0.85 | 1.60 | 0.60 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 1.85% | 1.11% | 2.10% |
| SEC 30-day Yield – Subsidized | 1.80 | 1.12 | 2.10 |
| SEC 30-day Yield – Unsubsidized | 1.68 | 1.00 | 1.98 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to
pay on Fund distributions or upon the redemption of Fund shares. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance for periods less than or equal to
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
eatonvance.com.
4
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Fund Profile
| Credit Quality (% of total investments)* |
| * | For purposes of the Fund’s rating restrictions, ratings are based on Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), as applicable. If securities are rated differently by the ratings agencies, the highest rating is applied. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by S&P or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality. Credit ratings are based largely on the ratings agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and 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. Holdings designated as “Not Rated” (if any) are not rated by the national ratings agencies stated above. |
5
Parametric
TABS Municipal Bond Funds
July 31, 2022
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for
the entire period (February 1, 2022 to July 31, 2022).
Actual Expenses
The first section of each table below provides information
about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Hypothetical Example for Comparison Purposes
The second section of each table below provides information
about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with
the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in each table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Parametric TABS Short-Term Municipal Bond Fund
| Beginning
Account Value (2/1/22) |
Ending
Account Value (7/31/22) |
Expenses
Paid During Period* (2/1/22 – 7/31/22) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $ 976.60 | $3.92 | 0.80% |
| Class C | $1,000.00 | $ 973.10 | $7.58 | 1.55% |
| Class I | $1,000.00 | $ 977.90 | $2.70 | 0.55% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,020.83 | $4.01 | 0.80% |
| Class C | $1,000.00 | $1,017.11 | $7.75 | 1.55% |
| Class I | $1,000.00 | $1,022.07 | $2.76 | 0.55% |
| * | Expenses are equal to the Fund's annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, 2022. |
7
Parametric
TABS Municipal Bond Funds
July 31, 2022
Fund
Expenses — continued
Parametric TABS Intermediate-Term Municipal Bond Fund
| Beginning
Account Value (2/1/22) |
Ending
Account Value (7/31/22) |
Expenses
Paid During Period* (2/1/22 – 7/31/22) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $ 963.70 | $4.33** | 0.89% |
| Class C | $1,000.00 | $ 960.10 | $7.97** | 1.64% |
| Class I | $1,000.00 | $ 964.90 | $3.12** | 0.64% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,020.38 | $4.46** | 0.89% |
| Class C | $1,000.00 | $1,016.66 | $8.20** | 1.64% |
| Class I | $1,000.00 | $1,021.62 | $3.21** | 0.64% |
| * | Expenses are equal to the Fund's annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, 2022. |
| ** | Absent an allocation of certain expenses to affiliates, expenses would be higher. |
8
Parametric
TABS Short-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited)
9
See Notes to Financial Statements.
Parametric
TABS Short-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
10
See Notes to Financial Statements.
Parametric
TABS Short-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
11
See Notes to Financial Statements.
Parametric
TABS Short-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
| The percentage shown for each investment category in the Portfolio of Investments is based on net assets. | |
| (1) | Variable rate demand obligation that may be tendered at par on any day for payment the lesser of 5 business days or 7 calendar days. The stated interest rate, which generally resets weekly, is determined by the remarketing agent and represents the rate in effect at July 31, 2022. |
| (2) | Floating rate security. The stated interest rate represents the rate in effect at July 31, 2022. |
| (3) | When-issued/delayed delivery security. |
| (4) | Multi-step coupon security. Interest rate represents the rate in effect at July 31, 2022. |
| (5) | May be deemed to be an affiliated investment company. The rate shown is the annualized seven-day yield as of July 31, 2022. |
| At July 31, 2022, the concentration of the Fund’s investments in the various states, determined as a percentage of net assets, is as follows: | |
| New York | 13.2% |
| Texas | 11.0% |
| Others, representing less than 10% individually | 68.8% |
| 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. At July 31, 2022, 2.0% 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 or financial guaranty assurance agency ranged from 0.6% to 1.4% of total investments. |
| Abbreviations: | |
| AGM | – Assured Guaranty Municipal Corp. |
| BAM | – Build America Mutual Assurance Co. |
| Liq | – Liquidity Provider |
| LOC | – Letter of Credit |
| PSF | – Permanent School Fund |
| SIFMA | – Securities Industry and Financial Markets Association Municipal Swap Index |
| SPA | – Standby Bond Purchase Agreement |
12
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited)
13
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
14
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
15
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
16
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
17
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
18
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Statement of Assets
and Liabilities (Unaudited)
| July 31, 2022 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Assets | ||
| Unaffiliated investments, at value (identified cost $257,496,556 and 553,256,383, respectively) | $ 257,122,368 | $ 553,680,799 |
| Affiliated investment, at value (identified cost $39,292,077 and 49,867,984, respectively) | 39,292,077 | 49,867,984 |
| Interest receivable | 2,168,039 | 5,535,480 |
| Dividends receivable from affiliated investment | 51,257 | 61,259 |
| Receivable for investments sold | 5,000,000 | 228,418 |
| Receivable for Fund shares sold | 222,940 | 817,056 |
| Receivable from affiliates | — | 145,469 |
| Total assets | $303,856,681 | $610,336,465 |
| Liabilities | ||
| Payable for investments purchased | $ 9,305,886 | $ — |
| Payable for when-issued securities | 18,611,066 | 21,068,731 |
| Payable for Fund shares redeemed | 5,812,680 | 1,959,284 |
| Distributions payable | 90,254 | 573,884 |
| Due to custodian | — | 5,792,454 |
| Payable to affiliates: | ||
| Investment adviser and administration fee | 73,312 | 231,121 |
| Distribution and service fees | 25,092 | 16,677 |
| Accrued expenses | 101,288 | 275,493 |
| Total liabilities | $ 34,019,578 | $ 29,917,644 |
| Net Assets | $269,837,103 | $580,418,821 |
| Sources of Net Assets | ||
| Paid-in capital | $ 277,954,713 | $ 600,851,485 |
| Accumulated loss | (8,117,610) | (20,432,664) |
| Net Assets | $269,837,103 | $580,418,821 |
| Class A Shares | ||
| Net Assets | $ 98,423,677 | $ 52,859,320 |
| Shares Outstanding | 9,690,372 | 4,423,690 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.16 | $ 11.95 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 10.50 | $ 12.35 |
| Class C Shares | ||
| Net Assets | $ 3,688,508 | $ 6,312,862 |
| Shares Outstanding | 365,000 | 528,590 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 10.11 | $ 11.94 |
| Class I Shares | ||
| Net Assets | $ 167,724,918 | $ 521,246,639 |
| Shares Outstanding | 16,507,681 | 43,578,609 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.16 | $ 11.96 |
| On sales of $100,000 or more, the offering price of Class A shares is reduced. | |
| * | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
19
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Statement of
Operations (Unaudited)
| Six Months Ended July 31, 2022 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Investment Income | ||
| Dividend income from affiliated investment | $ 80,237 | $ 108,439 |
| Interest income | 2,372,016 | 6,992,042 |
| Total investment income | $ 2,452,253 | $ 7,100,481 |
| Expenses | ||
| Investment adviser and administration fee | $ 629,442 | $ 1,784,807 |
| Distribution and service fees: | ||
| Class A | 135,337 | 69,178 |
| Class C | 20,207 | 34,966 |
| Trustees’ fees and expenses | 10,422 | 21,144 |
| Custodian fee | 36,714 | 74,202 |
| Transfer and dividend disbursing agent fees | 43,162 | 419,590 |
| Legal and accounting services | 29,252 | 30,538 |
| Printing and postage | 6,458 | 33,670 |
| Registration fees | 33,872 | 50,246 |
| Miscellaneous | 9,083 | 13,496 |
| Total expenses | $ 953,949 | $ 2,531,837 |
| Deduct: | ||
| Waiver and/or reimbursement of expenses by affiliates | $ 8,180 | $ 477,398 |
| Total expense reductions | $ 8,180 | $ 477,398 |
| Net expenses | $ 945,769 | $ 2,054,439 |
| Net investment income | $ 1,506,484 | $ 5,046,042 |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss): | ||
| Investment transactions | $ (7,891,206) | $ (21,157,931) |
| Net realized loss | $(7,891,206) | $(21,157,931) |
| Change in unrealized appreciation (depreciation): | ||
| Investments | $ (1,324,817) | $ (9,342,280) |
| Net change in unrealized appreciation (depreciation) | $(1,324,817) | $ (9,342,280) |
| Net realized and unrealized loss | $(9,216,023) | $(30,500,211) |
| Net decrease in net assets from operations | $(7,709,539) | $(25,454,169) |
20
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Statements of Changes
in Net Assets
| Six Months Ended July 31, 2022 (Unaudited) | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 1,506,484 | $ 5,046,042 |
| Net realized loss | (7,891,206) | (21,157,931) |
| Net change in unrealized appreciation (depreciation) | (1,324,817) | (9,342,280) |
| Net decrease in net assets from operations | $ (7,709,539) | $ (25,454,169) |
| Distributions to shareholders: | ||
| Class A | $ (489,001) | $ (397,715) |
| Class C | — | (23,798) |
| Class I | (1,023,168) | (4,610,740) |
| Total distributions to shareholders | $ (1,512,169) | $ (5,032,253) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (17,583,896) | $ (5,972,710) |
| Class C | (783,474) | (1,695,916) |
| Class I | (34,383,888) | (70,511,792) |
| Net decrease in net assets from Fund share transactions | $ (52,751,258) | $ (78,180,418) |
| Net decrease in net assets | $ (61,972,966) | $(108,666,840) |
| Net Assets | ||
| At beginning of period | $ 331,810,069 | $ 689,085,661 |
| At end of period | $269,837,103 | $ 580,418,821 |
21
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Statements of Changes
in Net Assets — continued
| Year Ended January 31, 2022 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 2,681,286 | $ 8,755,400 |
| Net realized gain | 772,723 | 436,464 |
| Net change in unrealized appreciation (depreciation) | (11,253,128) | (29,594,234) |
| Net decrease in net assets from operations | $ (7,799,119) | $ (20,402,370) |
| Distributions to shareholders: | ||
| Class A | $ (1,469,566) | $ (925,027) |
| Class C | (30,531) | (62,438) |
| Class I | (3,179,062) | (10,113,572) |
| Total distributions to shareholders | $ (4,679,159) | $ (11,101,037) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (11,725,431) | $ (2,977,634) |
| Class C | (2,666,827) | (2,436,425) |
| Class I | (37,797,402) | 110,138,775 |
| Net increase (decrease) in net assets from Fund share transactions | $ (52,189,660) | $104,724,716 |
| Net increase (decrease) in net assets | $ (64,667,938) | $ 73,221,309 |
| Net Assets | ||
| At beginning of year | $ 396,478,007 | $ 615,864,352 |
| At end of year | $331,810,069 | $689,085,661 |
22
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Financial
Highlights
| Short-Term
Municipal Bond Fund — Class A | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 10.450 | $ 10.830 | $ 10.660 | $ 10.350 | $ 10.300 | $ 10.370 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.046 | $ 0.059 | $ 0.077(1) | $ 0.160(1) | $ 0.154(1) | $ 0.149 |
| Net realized and unrealized gain (loss) | (0.290) | (0.316) | 0.401 | 0.308 | 0.049 | (0.074) |
| Total income (loss) from operations | $ (0.244) | $ (0.257) | $ 0.478 | $ 0.468 | $ 0.203 | $ 0.075 |
| Less Distributions | ||||||
| From net investment income | $ (0.046) | $ (0.057) | $ (0.078) | $ (0.158) | $ (0.153) | $ (0.145) |
| From net realized gain | — | (0.066) | (0.230) | — | — | — |
| Total distributions | $ (0.046) | $ (0.123) | $ (0.308) | $ (0.158) | $ (0.153) | $ (0.145) |
| Net asset value — End of period | $10.160 | $ 10.450 | $ 10.830 | $ 10.660 | $ 10.350 | $ 10.300 |
| Total Return(2) | (2.34)% (3) | (2.39)% | 4.51% | 4.56% | 2.00% | 0.71% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 98,424 | $119,419 | $135,622 | $109,210 | $113,654 | $149,651 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses | 0.80% (4)(5) | 0.80% | 0.82% | 0.88% | 0.91% | 0.90% |
| Net investment income | 0.90% (4) | 0.59% | 0.71% | 1.52% | 1.50% | 1.39% |
| Portfolio Turnover | 50% (3) | 96% | 176% | 51% | 67% | 54% |
| (1) | Computed using average shares outstanding. |
| (2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | The investment adviser reduced a portion of its adviser and administration fee (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
23
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| Short-Term
Municipal Bond Fund — Class C | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 10.390 | $ 10.790 | $ 10.640 | $ 10.320 | $ 10.270 | $ 10.340 |
| Income (Loss) From Operations | ||||||
| Net investment income (loss)(1) | $ 0.007 | $ (0.017) | $ 0.005 | $ 0.082 | $ 0.077 | $ 0.067 |
| Net realized and unrealized gain (loss) | (0.287) | (0.317) | 0.387 | 0.317 | 0.049 | (0.071) |
| Total income (loss) from operations | $ (0.280) | $ (0.334) | $ 0.392 | $ 0.399 | $ 0.126 | $ (0.004) |
| Less Distributions | ||||||
| From net investment income | $ — | $ — | $ (0.012) | $ (0.079) | $ (0.076) | $ (0.066) |
| From net realized gain | — | (0.066) | (0.230) | — | — | — |
| Total distributions | $ — | $ (0.066) | $ (0.242) | $ (0.079) | $ (0.076) | $ (0.066) |
| Net asset value — End of period | $10.110 | $10.390 | $10.790 | $10.640 | $10.320 | $10.270 |
| Total Return(2) | (2.69)% (3) | (3.11)% | 3.70% | 3.88% | 1.24% | (0.04)% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 3,689 | $ 4,603 | $ 7,473 | $ 24,622 | $ 35,832 | $ 52,079 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses | 1.55% (4)(5) | 1.55% | 1.57% | 1.63% | 1.66% | 1.65% |
| Net investment income (loss) | 0.14% (4) | (0.16)% | 0.05% | 0.78% | 0.75% | 0.64% |
| Portfolio Turnover | 50% (3) | 96% | 176% | 51% | 67% | 54% |
| (1) | Computed using average shares outstanding. |
| (2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | The investment adviser reduced a portion of its adviser and administration fee (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
24
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| Short-Term
Municipal Bond Fund — Class I | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 10.450 | $ 10.830 | $ 10.660 | $ 10.350 | $ 10.300 | $ 10.370 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.058 | $ 0.086 | $ 0.105 | $ 0.186 | $ 0.181 | $ 0.172 |
| Net realized and unrealized gain (loss) | (0.290) | (0.316) | 0.400 | 0.308 | 0.048 | (0.071) |
| Total income (loss) from operations | $ (0.232) | $ (0.230) | $ 0.505 | $ 0.494 | $ 0.229 | $ 0.101 |
| Less Distributions | ||||||
| From net investment income | $ (0.058) | $ (0.084) | $ (0.105) | $ (0.184) | $ (0.179) | $ (0.171) |
| From net realized gain | — | (0.066) | (0.230) | — | — | — |
| Total distributions | $ (0.058) | $ (0.150) | $ (0.335) | $ (0.184) | $ (0.179) | $ (0.171) |
| Net asset value — End of period | $ 10.160 | $ 10.450 | $ 10.830 | $ 10.660 | $ 10.350 | $ 10.300 |
| Total Return(1) | (2.21)% (2) | (2.14)% | 4.77% | 4.82% | 2.25% | 0.96% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $167,725 | $207,787 | $253,382 | $157,176 | $164,679 | $179,156 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses | 0.55% (3)(4) | 0.55% | 0.57% | 0.63% | 0.66% | 0.65% |
| Net investment income | 1.15% (3) | 0.84% | 0.92% | 1.77% | 1.75% | 1.64% |
| Portfolio Turnover | 50% (2) | 96% | 176% | 51% | 67% | 54% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | Not annualized. |
| (3) | Annualized. |
| (4) | The investment adviser reduced a portion of its adviser and administration fee (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
25
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| Intermediate-Term
Municipal Bond Fund — Class A | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 12.490 | $ 13.070 | $ 12.810 | $ 12.210 | $ 12.160 | $ 12.070 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.086 | $ 0.135 | $ 0.184 | $ 0.228 | $ 0.235 | $ 0.227 |
| Net realized and unrealized gain (loss) | (0.540) | (0.532) | 0.385 | 0.637 | 0.050 | 0.090 |
| Total income (loss) from operations | $ (0.454) | $ (0.397) | $ 0.569 | $ 0.865 | $ 0.285 | $ 0.317 |
| Less Distributions | ||||||
| From net investment income | $ (0.086) | $ (0.135) | $ (0.184) | $ (0.228) | $ (0.235) | $ (0.227) |
| From net realized gain | — | (0.048) | (0.125) | (0.037) | — | — |
| Total distributions | $ (0.086) | $ (0.183) | $ (0.309) | $ (0.265) | $ (0.235) | $ (0.227) |
| Net asset value — End of period | $11.950 | $12.490 | $13.070 | $12.810 | $12.210 | $12.160 |
| Total Return(1)(2) | (3.63)% (3) | (3.08)% | 4.49% | 7.15% | 2.38% | 2.62% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 52,859 | $ 61,492 | $ 67,422 | $ 50,697 | $ 42,715 | $ 48,494 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 0.89% (4)(5) | 0.90% | 0.90% | 0.90% | 0.90% | 0.90% |
| Net investment income | 1.44% (5) | 1.09% | 1.41% | 1.81% | 1.95% | 1.85% |
| Portfolio Turnover | 81% (3) | 61% | 104% | 74% | 86% | 62% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and/or sub-adviser reimbursed certain operating expenses (equal to 0.16%, 0.12%, 0.09%, 0.08%, 0.08% and 0.07% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Includes a reduction by the investment adviser of a portion of its adviser and administration fee due to the Fund's investment in the Liquidity Fund (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (5) | Annualized. |
26
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| Intermediate-Term
Municipal Bond Fund — Class C | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 12.480 | $ 13.070 | $ 12.810 | $ 12.210 | $ 12.160 | $ 12.060 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.041 | $ 0.044(1) | $ 0.092(1) | $ 0.133 | $ 0.143 | $ 0.134 |
| Net realized and unrealized gain (loss) | (0.540) | (0.548) | 0.379 | 0.638 | 0.051 | 0.101 |
| Total income (loss) from operations | $ (0.499) | $ (0.504) | $ 0.471 | $ 0.771 | $ 0.194 | $ 0.235 |
| Less Distributions | ||||||
| From net investment income | $ (0.041) | $ (0.038) | $ (0.086) | $ (0.134) | $ (0.144) | $ (0.135) |
| From net realized gain | — | (0.048) | (0.125) | (0.037) | — | — |
| Total distributions | $ (0.041) | $ (0.086) | $ (0.211) | $ (0.171) | $ (0.144) | $ (0.135) |
| Net asset value — End of period | $11.940 | $12.480 | $13.070 | $12.810 | $12.210 | $12.160 |
| Total Return(2)(3) | (3.99)% (4) | (3.88)% | 3.70% | 6.35% | 1.61% | 1.94% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 6,313 | $ 8,362 | $ 11,226 | $ 22,557 | $ 24,456 | $ 29,221 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (3) | 1.64% (5)(6) | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
| Net investment income | 0.69% (6) | 0.34% | 0.72% | 1.08% | 1.20% | 1.10% |
| Portfolio Turnover | 81% (4) | 61% | 104% | 74% | 86% | 62% |
| (1) | Computed using average shares outstanding. |
| (2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (3) | The investment adviser and administrator and/or sub-adviser reimbursed certain operating expenses (equal to 0.16%, 0.12%, 0.09%, 0.08%, 0.08% and 0.07% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (4) | Not annualized. |
| (5) | Includes a reduction by the investment adviser of a portion of its adviser and administration fee due to the Fund's investment in the Liquidity Fund (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (6) | Annualized. |
27
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| Intermediate-Term
Municipal Bond Fund — Class I | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 12.500 | $ 13.090 | $ 12.820 | $ 12.220 | $ 12.180 | $ 12.080 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.101 | $ 0.167 | $ 0.216 | $ 0.260 | $ 0.265 | $ 0.258 |
| Net realized and unrealized gain (loss) | (0.540) | (0.542) | 0.395 | 0.636 | 0.040 | 0.100 |
| Total income (loss) from operations | $ (0.439) | $ (0.375) | $ 0.611 | $ 0.896 | $ 0.305 | $ 0.358 |
| Less Distributions | ||||||
| From net investment income | $ (0.101) | $ (0.167) | $ (0.216) | $ (0.259) | $ (0.265) | $ (0.258) |
| From net realized gain | — | (0.048) | (0.125) | (0.037) | — | — |
| Total distributions | $ (0.101) | $ (0.215) | $ (0.341) | $ (0.296) | $ (0.265) | $ (0.258) |
| Net asset value — End of period | $ 11.960 | $ 12.500 | $ 13.090 | $ 12.820 | $ 12.220 | $ 12.180 |
| Total Return(1)(2) | (3.51)% (3) | (2.90)% | 4.82% | 7.41% | 2.63% | 2.87% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $521,247 | $619,232 | $537,216 | $404,214 | $396,647 | $413,436 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 0.64% (4)(5) | 0.65% | 0.65% | 0.65% | 0.65% | 0.65% |
| Net investment income | 1.69% (5) | 1.34% | 1.66% | 2.07% | 2.19% | 2.10% |
| Portfolio Turnover | 81% (3) | 61% | 104% | 74% | 86% | 62% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | The investment adviser and administrator and/or sub-adviser reimbursed certain operating expenses (equal to 0.16%, 0.12%, 0.09%, 0.08%, 0.08% and 0.07% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Includes a reduction by the investment adviser of a portion of its adviser and administration fee due to the Fund's investment in the Liquidity Fund (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (5) | Annualized. |
28
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Municipals Trust II (the Trust) is a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Trust presently consists of six funds, two of which, each diversified, are included in these financial
statements. They include Parametric TABS Short-Term Municipal Bond Fund (Short-Term Municipal Bond Fund) and Parametric TABS Intermediate-Term Municipal Bond Fund (Intermediate-Term Municipal Bond Fund), (each individually referred to as the Fund,
and collectively, the Funds). The Funds’ investment objective is to seek after-tax total return. The Funds offer three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares
are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Effective November 5, 2020, Class C shares automatically convert to Class A shares eight years after their purchase as described in the
Funds’ prospectus. Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to
different expenses. Realized and unrealized gains and losses are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Net investment income, other than class-specific expenses,
is allocated daily to each class of shares based upon the ratio of the value of each class’s paid shares to the total value of all paid shares. Each class of shares differs in its distribution plan and certain other class-specific
expenses.
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 (U.S. GAAP). Each Fund is an investment company and follows accounting and reporting guidance in the
Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment
Valuation—The following methodologies are used to determine the market value or fair value of
investments.
Debt Obligations. Debt obligations 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 ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, 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 debt obligations purchased with a
remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Other. Investments in
management investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value as of the close of each business day.
Fair Valuation. 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 most fairly reflects the
security’s “fair value”, which is the amount that a 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 companies or 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 company’s or entity’s financial statements, 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. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to
shareholders.
As of July 31, 2022, the Funds had
no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal
Revenue Service for a period of three years from the date of filing.
D Expenses—The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific
fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
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.
29
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
F Use of
Estimates—The preparation of the financial statements in conformity with U.S. GAAP 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 the Trust’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Funds. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal
liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume, upon request by the
shareholder, 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 When-Issued Securities and Delayed Delivery
Transactions—The Funds may purchase 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 cash and/or 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. Such
security purchases are subject to the risk that when delivered they will be worth less than the agreed upon payment price. Losses may also arise if the counterparty does not perform under the contract.
I Interim Financial Statements—The interim financial statements relating to July 31, 2022 and for the six months then ended have not
been audited by an independent registered public accounting firm, but in the opinion of the Funds' management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Distributions to
Shareholders and Income Tax Information
The net
investment income of each Fund is determined daily and substantially all of the net investment income so determined is declared as a dividend to shareholders of record at the time of declaration. Distributions are declared separately for each class
of shares. Distributions are paid monthly. Distributions of realized capital gains are made at least annually. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of a Fund at the net asset value as
of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only
distributions in excess of tax basis earnings and profits are 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.
The cost and unrealized appreciation (depreciation) of
investments of each Fund at July 31, 2022, as determined on a federal income tax basis, were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Aggregate cost | $296,725,583 | $603,106,488 |
| Gross unrealized appreciation | $ 3,319,379 | $ 9,930,120 |
| Gross unrealized depreciation | (3,630,517) | (9,487,825) |
| Net unrealized appreciation (depreciation) | $ (311,138) | $ 442,295 |
30
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
3 Investment Adviser and Administration Fee and
Other Transactions with Affiliates
The investment adviser
and administration fee is earned by Eaton Vance Management (EVM), an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory and administrative services rendered to each Fund. The fee is computed at an annual
rate as a percentage of average daily net assets as follows and is payable monthly:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | ||||
| Annual Fee Rate | Annual Fee Rate | ||||
| Average Daily Net Assets | As
of July 1, 2022* |
Prior
to July 1, 2022 |
As
of July 1, 2022* |
Prior
to July 1, 2022 | |
| Up to $500 million | 0.3500% | 0.4500% | 0.5000% | 0.6000% | |
| $500 million but less than $1 billion | 0.3500% | 0.4400% | 0.5000% | 0.6000% | |
| $1 billion but less than $2 billion | 0.3375% | 0.4300% | 0.4750% | 0.5750% | |
| $2 billion but less than $5 billion | 0.3250% | 0.4100% | 0.4550% | 0.5500% | |
| $5 billion and over | 0.3175% | 0.4000% | 0.4400% | 0.5300% | |
| * | Reflects a fee reduction pursuant to an amendment to each Fund's investment advisory and administrative agreement effective July 1, 2022. |
For the six months ended July 31, 2022, investment adviser and
administration fees incurred by the Funds and the effective annual rates, as a percentage of average daily net assets, were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Investment Adviser and Administration Fee | $629,442 | $1,784,807 |
| Effective Annual Rate | 0.43% | 0.58% |
Pursuant to an investment
sub-advisory agreement, EVM has delegated the investment management of each Fund to Parametric Portfolio Associates LLC (Parametric), an affiliate of EVM and an indirect, wholly-owned subsidiary of Morgan Stanley. EVM pays Parametric a portion of
its investment adviser and administration fee for sub-advisory services provided to the Funds.
Effective April 26, 2022, each Fund may invest in a money
market fund, the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government Portfolio (the “Liquidity Fund”), an open-end management investment company managed by Morgan Stanley Investment Management Inc., a
wholly-owned subsidiary of Morgan Stanley. The investment adviser and administration fee paid by each Fund is reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by each Fund due to its investment in the
Liquidity Fund. For the six months ended July 31, 2022, the investment adviser and administration fee paid was reduced by $8,180 and $11,417 for Short-Term Municipal Bond Fund and Intermediate-Term Municipal Bond Fund, respectively, relating to each
Fund’s investment in the Liquidity Fund. Prior to April 26, 2022, each Fund may have invested its cash in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by EVM. EVM did not receive a fee for
advisory services provided to Cash Reserves Fund.
EVM and
Parametric have agreed to reimburse the Funds’ expenses to the extent that total annual fund operating expenses (relating to ordinary operating expenses only and excluding expenses such as brokerage commissions, acquired fund fees and expenses
of unaffiliated funds, borrowing costs, taxes or litigation expenses) exceed 0.76%, 1.51% and 0.51% of Short-Term Municipal Bond Fund's average daily net assets for Class A, Class C and Class I, respectively, effective July 1, 2022; and 0.85%, 1.60%
and 0.60% (0.90%, 1.65% and 0.65% prior to July 1, 2022) of Intermediate-Term Municipal Bond Fund's average daily net assets for Class A, Class C and Class I, respectively. These agreements may be changed or terminated after May 31, 2023. Pursuant
to these agreements, EVM and Parametric were allocated none and $465,981 in total of Short-Term Municipal Bond Fund's and Intermediate-Term Municipal Bond Fund's operating expenses, respectively, for the six months ended July 31, 2022.
EVM provides sub-transfer agency and related services to the
Funds pursuant to a Sub-Transfer Agency Support Services Agreement. Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Funds’ principal underwriter, received a portion of the sales charge on sales of Class A shares of the Funds.
Morgan Stanley affiliated broker-dealers, which may be deemed to be affiliates of EVM and EVD, also received a portion of the sales charge on the sales of Class A shares. EVD also received distribution and service fees from Class A and Class C
shares (see Note 4) and contingent deferred sales charges
31
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
(see Note 5).
Sub-transfer agent fees earned by EVM, which are included in transfer and dividend disbursing agent fees on the Statements of Operations, and Class A sales charges that the Funds were informed were received by EVD and Morgan Stanley affiliated
broker-dealers for the six months ended July 31, 2022 were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| EVM's Sub-Transfer Agent Fees | $2,473 | $2,221 |
| EVD's Class A Sales Charges | $ 262 | $ 403 |
| Morgan Stanley affiliated broker-dealers’ Class A Sales Charges | $ — | $1,500 |
Trustees and officers of the
Funds who are members of EVM’s organization receive remuneration for their services to the Funds out of the investment adviser and administration fee. Trustees of the Funds who are not affiliated with EVM may elect to defer
receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended July 31, 2022, no significant amounts have been deferred. Certain officers and Trustees of the
Funds are officers of EVM.
4 Distribution Plans
Each Fund has in effect a distribution plan for Class A shares
(Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, each Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and
facilities provided to each Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended July 31, 2022 for Class A shares amounted to the
following:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class A Distribution and Service Fees | $135,337 | $69,178 |
Each Fund also has in effect a
distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, each Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for
providing ongoing distribution services and facilities to the respective Funds. For the six months ended July 31, 2022, the Funds paid or accrued to EVD the following distribution fees:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class C Distribution Fees | $15,155 | $26,225 |
Pursuant to the Class C
Plan, the Funds also make payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of the average daily net assets attributable to Class C shares. Service fees paid or accrued are for
personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended July 31, 2022 amounted to the
following:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class C Service Fees | $5,052 | $8,741 |
Distribution and service fees are
subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
32
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is
imposed on redemptions of Class C shares made within 12 months of purchase. Class A shares may be subject to a 0.75% (1% prior to April 29, 2022) CDSC if redeemed within 12 months (18 months prior to April 29, 2022) of purchase (depending on the
circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six
months ended July 31, 2022, the Funds were informed that EVD received approximately the following amounts of CDSCs paid by Class A and Class C shareholders:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class A | $5,000 | $ 300 |
| Class C | $ — | $2,000 |
6 Purchases and Sales of
Investments
Purchases and sales of investments, other
than short-term obligations, for the six months ended July 31, 2022 were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Purchases | ||
| Investments (non-U.S. Government) | $ 134,148,516 | $ 484,787,776 |
| U.S. Government and Agency Securities | 6,161,203 | — |
| Total Purchases | $140,309,719 | $484,787,776 |
| Sales | ||
| Investments (non-U.S. Government) | $ 150,716,318 | $ 464,629,733 |
| U.S. Government and Agency Securities | 42,545,881 | 102,142,964 |
| Total Sales | $193,262,199 | $566,772,697 |
7 Shares of Beneficial
Interest
Each Fund’s Declaration of Trust permits
the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Funds) and classes. Transactions in Fund shares were as
follows:
| Short-Term Municipal Bond Fund | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |||||
| Shares | Amount | Shares | Amount | |||
| Class A | ||||||
| Sales | 227,277 | $ 2,302,396 | 1,192,418 | $ 12,793,020 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 40,835 | 413,060 | 116,663 | 1,246,260 | ||
| Redemptions | (2,019,429) | (20,437,492) | (2,532,674) | (27,132,468) | ||
| Converted from Class C shares | 13,731 | 138,140 | 127,144 | 1,367,757 | ||
| Net decrease | (1,737,586) | $(17,583,896) | (1,096,449) | $ (11,725,431) | ||
33
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| Short-Term Municipal Bond Fund (continued) | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |||||
| Shares | Amount | Shares | Amount | |||
| Class C | ||||||
| Sales | 27,974 | $ 278,235 | 50,891 | $ 544,607 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | — | — | 2,109 | 22,375 | ||
| Redemptions | (92,274) | (923,569) | (174,871) | (1,866,052) | ||
| Converted to Class A shares | (13,811) | (138,140) | (127,673) | (1,367,757) | ||
| Net decrease | (78,111) | $ (783,474) | (249,544) | $ (2,666,827) | ||
| Class I | ||||||
| Sales | 3,018,577 | $ 30,437,389 | 6,930,959 | $ 74,416,982 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 67,746 | 685,775 | 201,729 | 2,157,637 | ||
| Redemptions | (6,455,917) | (65,507,052) | (10,646,030) | (114,372,021) | ||
| Net decrease | (3,369,594) | $(34,383,888) | (3,513,342) | $ (37,797,402) | ||
| Intermediate-Term Municipal Bond Fund | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |||||
| Shares | Amount | Shares | Amount | |||
| Class A | ||||||
| Sales | 510,004 | $ 6,077,746 | 1,201,456 | $ 15,541,810 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 16,942 | 202,238 | 36,308 | 467,442 | ||
| Redemptions | (1,049,215) | (12,519,270) | (1,501,941) | (19,390,738) | ||
| Converted from Class C shares | 22,239 | 266,576 | 31,216 | 403,852 | ||
| Net decrease | (500,030) | $ (5,972,710) | (232,961) | $ (2,977,634) | ||
| Class C | ||||||
| Sales | 24,372 | $ 289,234 | 80,394 | $ 1,040,821 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 911 | 10,856 | 2,128 | 27,373 | ||
| Redemptions | (144,351) | (1,729,430) | (240,442) | (3,100,767) | ||
| Converted to Class A shares | (22,245) | (266,576) | (31,222) | (403,852) | ||
| Net decrease | (141,313) | $ (1,695,916) | (189,142) | $ (2,436,425) | ||
34
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| Intermediate-Term Municipal Bond Fund (continued) | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |||||
| Shares | Amount | Shares | Amount | |||
| Class I | ||||||
| Sales | 11,032,774 | $ 131,596,017 | 20,658,776 | $ 267,233,472 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 158,666 | 1,895,688 | 325,454 | 4,193,986 | ||
| Redemptions | (17,146,892) | (204,003,497) | (12,498,276) | (161,288,683) | ||
| Net increase (decrease) | (5,955,452) | $ (70,511,792) | 8,485,954 | $ 110,138,775 | ||
8 Line of Credit
The Funds participate with other portfolios and funds managed
by EVM and its affiliates in an $800 million unsecured line of credit agreement with a group of banks, which is in effect through October 25, 2022. Borrowings are made by the Funds solely for temporary purposes related to redemptions and other
short-term cash needs. Interest is charged to each Fund based on its borrowings at an amount above either the Secured Overnight Financing Rate (SOFR) or Federal Funds rate. In addition, a fee computed at an annual rate of 0.15% on the daily unused
portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. In connection with the renewal of the agreement in October 2021, an arrangement fee totaling $150,000 was incurred that was allocated
to the participating portfolios and funds. Because the line of credit is not available exclusively to the Funds, a Fund may be unable to borrow some or all of its requested amounts at any particular time. The Funds did not have any significant
borrowings or allocated fees during the six months ended July 31, 2022.
9 Overdraft Advances
Pursuant to the custodian agreement, State Street Bank and
Trust Company (SSBT) may, in its discretion, advance funds to the Funds to make properly authorized payments. When such payments result in an overdraft, each Fund is obligated to repay SSBT at the current rate of interest charged by SSBT for secured
loans (currently, the Federal Funds rate plus 2%). This obligation is payable on demand to SSBT. SSBT has a lien on each Fund’s assets to the extent of any overdraft. At July 31, 2022, Intermediate-Term Municipal Bond Fund had a payment due to
SSBT pursuant to the foregoing arrangement of $5,792,454. Based on the short-term nature of these payments and the variable interest rate, the carrying value of the overdraft advances approximated its fair value at July 31, 2022. If measured at fair
value, overdraft advances would have been considered as Level 2 in the fair value hierarchy (see Note 11) at July 31, 2022. The Funds’ average overdraft advances during the six months ended July 31, 2022 were not significant.
10 Investments in Affiliated Funds
At July 31, 2022, the value of each Fund’s investment in
affiliated funds was $39,292,077 and $49,867,984 for Short-Term Municipal Bond Fund and Intermediate-Term Municipal Bond Fund, respectively, which represents 14.5% and 8.6% of net assets for Short-Term Municipal Bond Fund and Intermediate-Term
Municipal Bond Fund, respectively. Transactions in affiliated funds by the Funds for the six months ended July 31, 2022 were as follows:
| Short-Term
Municipal Bond Fund |
||||||||
| Name | Value,
beginning of period |
Purchases | Sales
proceeds |
Net
realized gain (loss) |
Change
in unrealized appreciation (depreciation) |
Value,
end of period |
Dividend
income |
Shares,
end of period |
| Short-Term Investments | ||||||||
| Liquidity Fund | $ — | $67,561,130 | $(28,269,053) | $ — | $ — | $39,292,077 | $80,237 | 39,292,077 |
35
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| Intermediate-Term
Municipal Bond Fund |
||||||||
| Name | Value,
beginning of period |
Purchases | Sales
proceeds |
Net
realized gain (loss) |
Change
in unrealized appreciation (depreciation) |
Value,
end of period |
Dividend
income |
Shares,
end of period |
| Short-Term Investments | ||||||||
| Liquidity Fund | $ — | $119,575,126 | $(69,707,142) | $ — | $ — | $49,867,984 | $108,439 | 49,867,984 |
11 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.
At July 31, 2022, the hierarchy of inputs used in valuing the
Funds' investments, which are carried at value, were as follows:
| Short-Term
Municipal Bond Fund |
||||
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 250,962,396 | $ — | $ 250,962,396 |
| U.S. Treasury Obligations | — | 6,159,972 | — | 6,159,972 |
| Short-Term Investments | 39,292,077 | — | — | 39,292,077 |
| Total Investments | $39,292,077 | $257,122,368 | $ — | $296,414,445 |
| Intermediate-Term
Municipal Bond Fund |
||||
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 553,680,799 | $ — | $ 553,680,799 |
| Short-Term Investments | 49,867,984 | — | — | 49,867,984 |
| Total Investments | $49,867,984 | $553,680,799 | $ — | $603,548,783 |
36
Parametric
TABS Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
12 Risks and Uncertainties
Pandemic Risk
An outbreak of respiratory disease caused by a novel
coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines,
cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and
economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and industries, and could continue to affect the market
in significant and unforeseen ways. Other epidemics and pandemics that may arise in the future may have similar effects. Any such impact could adversely affect the Funds' performance, or the performance of the securities in which the Funds
invest.
37
Parametric
TABS Municipal Bond Funds
July 31, 2022
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 the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year only if its continuation is approved on an annual basis by a vote of the fund’s
board of trustees, including 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 held on June 8, 2022, the Boards of
Trustees/Directors (collectively, the “Board”) that oversee the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the “Eaton Vance Funds”), including a
majority of the independent trustees (the “Independent Trustees”), voted to approve the continuation of existing investment advisory agreements and sub-advisory
agreements1 for each of the Eaton Vance Funds for an additional one-year period. The Board relied upon the affirmative recommendation of its Contract Review Committee, which is
a committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including information
specifically requested by the Board) for a series of formal meetings held between April and June 2022. Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees, to the extent
such information was relevant to the Contract Review Committee’s annual evaluation of the investment advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory
agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable to all or groups of Eaton Vance Funds, which is referenced immediately below, and information
applicable to the particular Eaton Vance Fund covered by this report (additional fund-specific information is referenced below under “Results of the Contract Review Process”). (For funds that invest through one or more underlying
portfolios, references to “each fund” in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
• A report from an independent
data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the independent data provider (“comparable funds”);
• A report from an independent
data provider comparing each fund’s total expense ratio (and its components) to those of comparable funds;
• A report from an independent
data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices,
over various time periods;
• In certain instances, data
regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in consultation with the Portfolio Management Committee of the Board (a committee exclusively comprised of Independent
Trustees);
• Comparative
information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in managing other accounts (which may include other mutual funds, collective investment funds and institutional accounts) using investment
strategies and techniques similar to those used in managing such fund(s), if any;
• Profitability analyses with
respect to the adviser and sub-adviser to each of the funds;
Information about Portfolio Management and Trading
• Descriptions of the investment
management services provided to each fund, as well as each of the funds’ investment strategies and policies;
• The procedures and processes
used to determine the value of fund assets, including, when necessary, the determination of “fair value” and actions taken to monitor and test the effectiveness of such procedures and processes;
• Information about the policies
and practices of each fund’s adviser and sub-adviser with respect to trading, including their processes for seeking best execution of portfolio transactions;
• Information about the
allocation of brokerage transactions and the benefits, if any, received by the adviser and sub-adviser to each fund as a result of brokerage allocation, including, as applicable, information concerning the acquisition of research through client
commission arrangements and policies with respect to “soft dollars”;
• Data relating to the portfolio
turnover rate of each fund and related information regarding active management in the context of particular strategies;
Information about each Adviser and Sub-adviser
• Reports detailing the
financial results and condition of the adviser and sub-adviser to each fund;
• Information regarding the
individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for portfolio managers and certain other investment professionals, information relating to their responsibilities
with respect to managing other mutual funds and investment accounts, as applicable;
1 Not all Eaton Vance Funds have entered into a sub-advisory agreement with a sub-adviser. Accordingly,
references to “sub-adviser” or “sub-advisory agreement” in this “Overview” section may not be applicable to the particular Eaton Vance Fund covered by this report. Following the “Overview” section,
further information regarding the Board’s evaluation of a fund’s contractual arrangements is included under the “Results of the Contract Review Process” section.
38
Parametric
TABS Municipal Bond Funds
July 31, 2022
Board of
Trustees’ Contract Approval — continued
• Information regarding the
adviser’s and its parent company’s (Morgan Stanley’s) efforts to retain and attract talented investment professionals, including in the context of a particularly competitive marketplace for talent, as well as the ongoing unique
environment presented by hybrid, remote and other alternative work arrangements;
• The Code of Ethics of the
adviser and its affiliates and the sub-adviser of each fund, together with information relating to compliance with, and the administration of, such codes;
• Policies and procedures
relating to proxy voting, including regular reporting with respect to fund proxy voting activities;
• Information regarding the
handling of corporate actions and class actions, as well as information regarding litigation and other regulatory matters;
• Information concerning the
resources devoted to compliance efforts undertaken by the adviser and its affiliates and the sub-adviser of each fund, if any, including descriptions of their various compliance programs and their record of compliance;
• Information concerning the
business continuity and disaster recovery plans of the adviser and its affiliates and the sub-adviser of each fund, if any;
• A description of Eaton Vance
Management’s and Boston Management and Research’s oversight of sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;
Other Relevant Information
• Information regarding
ongoing initiatives to further integrate and harmonize, where applicable, the investment management and other departments of the adviser and its affiliates with the overall investment management infrastructure of Morgan Stanley, in light of Morgan
Stanley’s acquisition of Eaton Vance on March 1, 2021;
• Information concerning the
nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates;
• Information concerning
oversight of the relationship with the custodian, subcustodians, fund accountants, and other third-party service providers by the adviser and/or administrator to each of the funds;
• Information concerning efforts
to implement policies and procedures with respect to various new regulations applicable to the funds, including Rule 12d1-4 (the Fund-of-Funds Rule), Rule 18f-4 (the Derivatives Rule) and Rule 2a-5 (the Fair Valuation Rule);
• For an Eaton Vance Fund
structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where relevant, the closed-end fund’s market prices (including as compared to the closed-end fund’s net
asset value (NAV)), trading volume data, continued use of auction preferred shares (where applicable), distribution rates and other relevant matters;
• The risks which the adviser
and/or its affiliates incur in connection with the management and operation of the funds, including, among others, litigation, regulatory, entrepreneurial, and other business risks (and the associated costs of such risks); and
• The terms of each investment
advisory agreement and sub-advisory agreement.
During the
various meetings of the Board and its committees over the course of the year leading up to the June 8, 2022 meeting, the Trustees received information from portfolio managers and other investment professionals of the advisers and sub-advisers of the
funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing the funds’ investment objectives. The Trustees also received information regarding risk management techniques
employed in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and
received and participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board and its committees, the
Independent Trustees held regular teleconferences to discuss, among other topics, matters relating to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review Committee was advised throughout the
contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee, with the advice of such counsel, exercised their own business judgment in determining the material
factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory agreement 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 investment advisory agreement and sub-advisory agreement. In evaluating each investment advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the
Contract Review Committee were also informed by multiple years of analysis and discussion with the adviser and sub-adviser to each of the Eaton Vance Funds.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other
information it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory and administrative agreements between each of Parametric TABS
Intermediate-Term Municipal Bond Fund and Parametric TABS Short-Term Municipal Bond Fund (together, the “Funds”) and Eaton Vance Management (the “Adviser”) and the sub-advisory agreements between the Adviser and Parametric
Portfolio Associates, LLC (the “Sub-adviser”), an affiliate of the Adviser, with respect to each Fund, including their respective fee structures, are in the interests of shareholders and, therefore, recommended to the Board approval of
each agreement. Based on the recommendation of the Contract Review Committee, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory and administrative agreement and the sub-advisory
agreement for each Fund.
39
Parametric
TABS Municipal Bond Funds
July 31, 2022
Board of
Trustees’ Contract Approval — continued
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory and
administrative agreements and the sub-advisory agreements for the Funds, the Board evaluated the nature, extent and quality of services provided to the Funds by the Adviser and the Sub-adviser.
The Board considered the Adviser’s and the
Sub-adviser’s management capabilities and investment processes in light of the types of investments held by each Fund, including the education, experience and number of investment professionals and other personnel who provide portfolio
management, investment research, and similar services to the Funds, including recent changes to such personnel, where relevant. Regarding the Adviser, the Board considered the Adviser’s responsibilities with respect to oversight of the
Sub-adviser. With respect to the Sub-adviser, the Board considered the resources available to the Sub-adviser in fulfilling its duties under the sub-advisory agreements and the abilities and experience of Sub-adviser’s investment professionals
in implementing the investment strategies of each Fund. In particular, the Board considered the abilities and experience of the Sub-adviser’s investment professionals in analyzing factors such as credit risk, tax efficiency, and special
considerations relevant to investing in municipal bonds, Treasury securities and other securities backed by the U.S. government or its agencies. The Board also considered the Sub-adviser’s tax-advantaged bond strategies group and the
Adviser’s and Sub-adviser’s municipal research groups involved in managing the Funds and other funds and accounts that invest primarily in municipal bonds and employ a tax-advantaged bond strategy. The Board also took into account the
resources dedicated to portfolio management and other services, the compensation methods of the Adviser and other factors, including the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and
supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including each Fund, by senior management, as well as the infrastructure, operational capabilities and support staff in
place to assist in the portfolio management and operations of the Funds, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in
managing the Funds.
The Board considered the compliance
programs of the Adviser and relevant affiliates thereof, including the Sub-adviser. The Board considered compliance and reporting matters regarding, among other things, personal trading by investment professionals, disclosure of portfolio holdings,
late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered 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 other administrative services provided or
overseen 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 fund complex offering exposure to a variety
of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the
Board concluded that the nature, extent and quality of services provided by the Adviser and the Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory and administrative agreements and the
sub-advisory agreements.
Fund Performance
The Board compared each Fund’s investment performance to
that of comparable funds identified by an independent data provider (the peer group), as well as appropriate benchmark indices. The Board’s review included comparative performance data with respect to each Fund for the one-, three-, five- and
ten-year periods ended December 31, 2021. In this regard, the Board noted that the performance of the Parametric TABS Intermediate-Term Municipal Bond Fund was consistent with the median performance of the Fund’s peer group for the three-year
period. The Board also noted that the performance of the Fund was lower than its primary and secondary benchmark indexes for the three-year period. The Board noted that the performance of the Parametric TABS Short-Term Municipal Bond was higher than
the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was equal to its primary benchmark index and lower than its secondary benchmark index for the three-year period.
The Board concluded that the performance of each Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by each Fund
for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered each Fund’s management fees and total expense ratio for the one-year period ended December 31,
2021, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered certain Fund specific factors that had an impact on each Fund’s total expense
ratio relative to comparable funds, as identified by management in response to inquiries from the Contract Review Committee.
After considering the foregoing information, and in light of
the nature, extent and quality of the services provided by the Adviser and the Sub-adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
40
Parametric
TABS Municipal Bond Funds
July 31, 2022
Board of
Trustees’ Contract Approval — continued
Profitability and “Fall-Out” Benefits
The Board considered the level of profits realized by the
Adviser and relevant affiliates thereof, including the Sub-adviser, 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 without regard
to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution or other services.
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, including the Sub-adviser, are deemed not to be excessive.
The Board also considered direct or indirect fall-out benefits
received by the Adviser and its affiliates, including the Sub-adviser, in connection with their respective relationships with the Funds, including the benefits of research services that may be available to the Adviser or the Sub-adviser as a result
of securities transactions effected for the Funds and other investment advisory clients.
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 each Fund increase. The Board acknowledged the difficulty in
accurately measuring the benefits resulting from economies of scale, if any, 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. Based upon
the foregoing, the Board concluded that each Fund currently shares in the benefits from economies of scale, if any, when they are realized by the Adviser. The Board also concluded that the structure of each advisory fee, which includes breakpoints
at several asset levels, will allow each Fund to continue to benefit from any economies of scale in the future.
41
Parametric
TABS Municipal Bond Funds
July 31, 2022
Liquidity Risk
Management Program
Each
Fund has implemented a written liquidity risk management program (Program) and related procedures to manage its liquidity in accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (Liquidity Rule). The Liquidity Rule defines
“liquidity risk” as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of the remaining investors’ interests in the fund. Each Fund’s Board of Trustees/Directors has
designated the investment adviser to serve as the administrator of the Program and the related procedures. The administrator has established a Liquidity Risk Management Oversight Committee (Committee) to perform the functions necessary to administer
the Program. As part of the Program, the administrator is responsible for identifying illiquid investments and categorizing the relative liquidity of each Fund’s investments in accordance with the Liquidity Rule. Under the Program, the
administrator assesses, manages, and periodically reviews each Fund’s liquidity risk, and is responsible for making certain reports to the Fund’s Board of Trustees/Directors and the Securities and Exchange Commission (SEC) regarding the
liquidity of the Fund’s investments, and to notify the Board of Trustees/Directors and the SEC of certain liquidity events specified in the Liquidity Rule. The liquidity of each Fund’s portfolio investments is determined based on a
number of factors including, but not limited to, relevant market, trading and investment-specific considerations under the Program.
At a meeting of each Fund’s Board of Trustees/Directors
on June 7, 2022, the Committee provided a written report to the Fund’s Board of Trustees/Directors pertaining to the operation, adequacy, and effectiveness of implementation of the Program, as well as the operation of the highly liquid
investment minimum (if applicable) for the period January 1, 2021 through December 31, 2021 (Review Period). The Program operated effectively during the Review Period, supporting the administrator’s ability to assess, manage and monitor Fund
liquidity risk, including during periods of market volatility and net redemptions. During the Review Period, each Fund met redemption requests on a timely basis.
There can be no assurance that the Program will achieve its
objectives in the future. Please refer to each Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
42
Parametric
TABS Municipal Bond Funds
July 31, 2022
Officers and
Trustees
| Officers | |
| Eric
A. Stein President |
Jill R.
Damon Secretary |
| Deidre
E. Walsh Vice President, Secretary and Chief Legal Officer |
Richard F.
Froio Chief Compliance Officer |
| James
F. Kirchner Treasurer |
|
| Trustees |
| * | Interested Trustee |
| ** | Mr. Bowser and Ms. Wiser began serving as Trustees effective April 4, 2022. |
43
Eaton Vance Funds
| Privacy Notice | April 2021 |
| FACTS | WHAT
DOES EATON VANCE DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The
types of personal information we collect and share depend on the product or service you have with us. This information can include:■ Social Security number and income ■ investment experience and risk tolerance ■ checking account number and wire transfer instructions |
| How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Eaton Vance chooses to share; and whether you can limit this sharing. |
| Reasons
we can share your personal information |
Does
Eaton Vance share? |
Can
you limit this sharing? |
| For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
| For our marketing purposes — to offer our products and services to you | Yes | No |
| For joint marketing with other financial companies | No | We don’t share |
| For our investment management affiliates’ everyday business purposes — information about your transactions, experiences, and creditworthiness | Yes | Yes |
| For our affiliates’ everyday business purposes — information about your transactions and experiences | Yes | No |
| For our affiliates’ everyday business purposes — information about your creditworthiness | No | We don’t share |
| For our investment management affiliates to market to you | Yes | Yes |
| For our affiliates to market to you | No | We don’t share |
| For nonaffiliates to market to you | No | We don’t share |
| To
limit our sharing |
Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.comPlease note:If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
| Questions? | Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.com |
44
Eaton Vance Funds
| Privacy Notice — continued | April 2021 |
Page 2
| Who we are | |
| Who is providing this notice? | Eaton Vance Management, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd., Eaton Vance Global Advisors Limited, Eaton Vance Management’s Real Estate Investment Group, Boston Management and Research, Calvert Research and Management, Eaton Vance and Calvert Fund Families and our investment advisory affiliates (“Eaton Vance”) (see Investment Management Affiliates definition below) |
| What we do | |
| How
does Eaton Vance protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information. |
| How
does Eaton Vance collect my personal information? |
We
collect your personal information, for example, when you■ open an account or make deposits or withdrawals from your account ■ buy securities from us or make a wire transfer ■ give us your contact informationWe also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can’t I limit all sharing? | Federal
law gives you the right to limit only■ sharing for affiliates’ everyday business purposes — information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to youState laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
| Definitions | |
| Investment
Management Affiliates |
Eaton Vance Investment Management Affiliates include registered investment advisers, registered broker- dealers, and registered and unregistered funds. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.■ Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.■ Eaton Vance does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.■ Eaton Vance doesn’t jointly market. |
| Other important information | |
| Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Nonaffiliates unless you provide us with your written consent to share such information.California: Except as permitted by law, we will not share personal information we collect about California residents with Nonaffiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us. | |
45
Eaton Vance Funds
IMPORTANT NOTICES
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 intermediary, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-260-0761, or contact your financial intermediary. Your instructions that householding not apply
to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial intermediary.
Portfolio
Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) files a schedule of portfolio holdings on Part F to Form N-PORT with the
SEC. Certain information filed on Form N-PORT may be viewed on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-260-0761 or in the EDGAR database on the SEC’s website at www.sec.gov.
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 1-800-260-0761 and by accessing the SEC’s website at www.sec.gov.
46
*FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the
professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to
investors at www.FINRA.org.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
Semiannual Report
July 31, 2022
Commodity Futures Trading Commission Registration. The Commodity Futures Trading Commission (“CFTC”) has adopted regulations that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a
prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The investment adviser has claimed an exclusion
from the definition of “commodity pool operator” under the Commodity Exchange Act with respect to its management of the Fund. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC
regulation. Because of its management of other strategies, the Fund's adviser and Parametric Portfolio Associates LLC (Parametric), sub-adviser to the Fund, are registered with the CFTC as commodity pool operators. The adviser and Parametric are
also registered as commodity trading advisors.
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.
This report must be preceded or accompanied by a current
summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and
prospectus, which can be obtained from a financial intermediary. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-260-0761.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Performance
Portfolio Manager(s) Brian C.
Barney, CFA, Devin J. Cooch, CFA and Alison Wagner, CFA, each of Parametric Portfolio Associates LLC
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
Six Months | One Year | Five Years | Ten Years |
| Class A at NAV | 02/01/2010 | 02/01/2010 | (4.16)% | (7.63)% | 1.31% | 2.81% |
| Class A with 3.25% Maximum Sales Charge | — | — | (7.29) | (10.66) | 0.64 | 2.46 |
| Class C at NAV | 02/01/2010 | 02/01/2010 | (4.44) | (8.32) | 0.55 | 2.19 |
| Class C with 1% Maximum Sales Charge | — | — | (5.39) | (9.23) | 0.55 | 2.19 |
| Class I at NAV | 02/01/2010 | 02/01/2010 | (4.04) | (7.41) | 1.56 | 3.06 |
|
| ||||||
| Bloomberg 10 Year Municipal Bond Index | — | — | (2.76)% | (6.09)% | 2.05% | 2.66% |
| Bloomberg 15 Year Municipal Bond Index | — | — | (4.84) | (8.19) | 2.36 | 3.06 |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 0.66% | 1.41% | 0.41% |
| Net | 0.65 | 1.40 | 0.40 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 1.79% | 1.05% | 2.04% |
| SEC 30-day Yield – Subsidized | 2.02 | 1.36 | 2.34 |
| SEC 30-day Yield – Unsubsidized | 1.99 | 1.32 | 2.30 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to
pay on Fund distributions or upon the redemption of Fund shares. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance for periods less than or equal to
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
eatonvance.com.
2
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Fund Profile
| Credit Quality (% of total investments)* |
Footnotes:
Fund invests in an affiliated investment company (Portfolio) with the same
objective(s) and policies as the Fund. References to investments are to the Portfolio’s holdings.
| * | For purposes of the Fund’s rating restrictions, ratings are based on Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), as applicable. If securities are rated differently by the ratings agencies, the highest rating is applied. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by S&P or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality. Credit ratings are based largely on the ratings agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and 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. Holdings designated as “Not Rated” (if any) are not rated by the national ratings agencies stated above. |
3
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Endnotes and
Additional Disclosures
| 1 | Bloomberg 10 Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 8-12 years. Bloomberg 15 Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 12-17 years. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
| 2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charges reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares.Effective April 15, 2015, the Fund changed its investment objective and investment strategy. Performance prior to April 15, 2015 reflects the Fund’s performance under its former investment objective and policies.Effective November 5, 2020, Class C shares automatically convert to Class A shares eight years after purchase. The average annual total returns listed for Class C reflect conversion to Class A shares after eight years. Prior to November 5, 2020, Class C shares automatically converted to Class A shares ten years after purchase. |
| 3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 5/31/23. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. Performance reflects expenses waived and/or reimbursed, if applicable. Without such waivers and/or reimbursements, performance would have been lower. |
| 4 | The Distribution Rate is based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV at the end of the period. The Fund’s distributions may be comprised of amounts characterized for federal income tax purposes as tax-exempt income, qualified and non-qualified ordinary dividends, capital gains and nondividend distributions, also known as return of capital. The Fund will determine the federal income tax character of distributions paid to a shareholder after the end of the calendar year. This is reported on the IRS form 1099-DIV and provided to the shareholder shortly after each year-end. The Fund’s distributions are determined by the investment adviser based on its current assessment of the Fund’s long-term return potential. As portfolio and market conditions change, the rate of distributions paid by the Fund could change. The SEC Yield is a standardized measure based on the estimated yield to maturity of a fund’s investments over a 30-day period and is based on the maximum offer price at the date specified. The SEC Yield is not based on the distributions made by the Fund, which may differ. Subsidized yield reflects the effect of fee waivers and expense reimbursements. |
| Fund profile subject to change due to active management. |
4
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for
the entire period (February 1, 2022 to July 31, 2022).
Actual Expenses
The first section of the table below provides information about
actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table below provides information
about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with
the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
| Beginning
Account Value (2/1/22) |
Ending
Account Value (7/31/22) |
Expenses
Paid During Period* (2/1/22 – 7/31/22) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $ 958.40 | $3.16** | 0.65% |
| Class C | $1,000.00 | $ 955.60 | $6.79** | 1.40% |
| Class I | $1,000.00 | $ 959.60 | $1.94** | 0.40% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,021.57 | $3.26** | 0.65% |
| Class C | $1,000.00 | $1,017.85 | $7.00** | 1.40% |
| Class I | $1,000.00 | $1,022.81 | $2.01** | 0.40% |
| * | Expenses are equal to the Fund's annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, 2022. The Example reflects the expenses of both the Fund and the Portfolio. |
| ** | Absent an allocation of certain expenses to affiliates, expenses would be higher. |
5
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Statement of Assets
and Liabilities (Unaudited)
| July 31, 2022 | |
| Assets | |
| Investment in 5-to-15 Year Laddered Municipal Bond Portfolio, at value (identified cost $697,925,427) | $ 690,731,048 |
| Receivable for Fund shares sold | 1,321,254 |
| Receivable from affiliates | 24,517 |
| Total assets | $692,076,819 |
| Liabilities | |
| Payable for Fund shares redeemed | $ 1,687,075 |
| Distributions payable | 221,561 |
| Payable to affiliates: | |
| Distribution and service fees | 35,276 |
| Accrued expenses | 150,461 |
| Total liabilities | $ 2,094,373 |
| Net Assets | $689,982,446 |
| Sources of Net Assets | |
| Paid-in capital | $ 725,663,186 |
| Accumulated loss | (35,680,740) |
| Net Assets | $689,982,446 |
| Class A Shares | |
| Net Assets | $ 69,090,349 |
| Shares Outstanding | 5,723,550 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 12.07 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 12.48 |
| Class C Shares | |
| Net Assets | $ 24,087,366 |
| Shares Outstanding | 1,996,207 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 12.07 |
| Class I Shares | |
| Net Assets | $ 596,804,731 |
| Shares Outstanding | 49,473,678 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 12.06 |
| On sales of $100,000 or more, the offering price of Class A shares is reduced. | |
| * | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
6
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Statement of
Operations (Unaudited)
| Six Months Ended | |
| July 31, 2022 | |
| Investment Income | |
| Dividend income allocated from Portfolio | $ 64,271 |
| Interest income allocated from Portfolio | 9,140,719 |
| Expenses allocated from Portfolio | (1,371,269) |
| Total investment income from Portfolio | $ 7,833,721 |
| Expenses | |
| Distribution and service fees: | |
| Class A | $ 92,104 |
| Class C | 132,983 |
| Trustees’ fees and expenses | 250 |
| Custodian fee | 25,977 |
| Transfer and dividend disbursing agent fees | 142,192 |
| Legal and accounting services | 17,516 |
| Printing and postage | 20,813 |
| Registration fees | 44,485 |
| Miscellaneous | 8,124 |
| Total expenses | $ 484,444 |
| Deduct: | |
| Allocation of expenses to affiliates | $ 66,168 |
| Total expense reductions | $ 66,168 |
| Net expenses | $ 418,276 |
| Net investment income | $ 7,415,445 |
| Realized and Unrealized Gain (Loss) from Portfolio | |
| Net realized gain (loss): | |
| Investment transactions | $ (24,110,720) |
| Net realized loss | $(24,110,720) |
| Change in unrealized appreciation (depreciation): | |
| Investments | $ (23,768,011) |
| Net change in unrealized appreciation (depreciation) | $(23,768,011) |
| Net realized and unrealized loss | $(47,878,731) |
| Net decrease in net assets from operations | $(40,463,286) |
7
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Statements of Changes
in Net Assets
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 7,415,445 | $ 15,011,060 |
| Net realized gain (loss) | (24,110,720) | 3,489,360 |
| Net change in unrealized appreciation (depreciation) | (23,768,011) | (42,921,803) |
| Net decrease in net assets from operations | $ (40,463,286) | $ (24,421,383) |
| Distributions to shareholders: | ||
| Class A | $ (625,243) | $ (1,170,757) |
| Class C | (125,654) | (222,704) |
| Class I | (6,641,774) | (13,597,794) |
| Total distributions to shareholders | $ (7,392,671) | $ (14,991,255) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (8,692,524) | $ (3,587,280) |
| Class C | (5,169,915) | (5,093,002) |
| Class I | (186,317,639) | 83,582,567 |
| Net increase (decrease) in net assets from Fund share transactions | $(200,180,078) | $ 74,902,285 |
| Other capital: | ||
| Portfolio transaction fee contributed to Portfolio | $ (368,142) | $ (240,536) |
| Portfolio transaction fee allocated from Portfolio | 367,621 | 249,295 |
| Net increase (decrease) in net assets from other capital | $ (521) | $ 8,759 |
| Net increase (decrease) in net assets | $(248,036,556) | $ 35,498,406 |
| Net Assets | ||
| At beginning of period | $ 938,019,002 | $ 902,520,596 |
| At end of period | $ 689,982,446 | $938,019,002 |
8
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Financial
Highlights
| Class A | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 12.700 | $ 13.240 | $ 12.900 | $ 12.220 | $ 12.110 | $ 11.900 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.102 | $ 0.182 | $ 0.213 | $ 0.237 | $ 0.225 | $ 0.210 |
| Net realized and unrealized gain (loss) | (0.630) | (0.540) | 0.340 | 0.680 | 0.110 | 0.210 |
| Total income (loss) from operations | $ (0.528) | $ (0.358) | $ 0.553 | $ 0.917 | $ 0.335 | $ 0.420 |
| Less Distributions | ||||||
| From net investment income | $ (0.102) | $ (0.182) | $ (0.213) | $ (0.237) | $ (0.225) | $ (0.210) |
| Total distributions | $ (0.102) | $ (0.182) | $ (0.213) | $ (0.237) | $ (0.225) | $ (0.210) |
| Net asset value — End of period | $12.070 | $12.700 | $13.240 | $12.900 | $12.220 | $ 12.110 |
| Total Return(1)(2) | (4.16)% (3) | (2.73)% | 4.34% | 7.56% | 2.80% | 3.53% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 69,090 | $ 81,892 | $ 88,983 | $ 85,608 | $ 87,287 | $104,397 |
| Ratios (as a percentage of average daily net assets):(4) | ||||||
| Expenses (2) | 0.65% (5)(6) | 0.65% | 0.65% | 0.65% | 0.65% | 0.65% |
| Net investment income | 1.71% (6) | 1.39% | 1.65% | 1.88% | 1.87% | 1.72% |
| Portfolio Turnover of the Portfolio | 34% (3) | 22% | 51% | 28% | 78% | 35% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and the sub-adviser of the Fund and the investment adviser and the sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.03%, 0.01%, 0.03%, 0.02%, 0.04% and 0.05% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of the Portfolio's adviser fee due to the Portfolio's investment in the Liquidity Fund (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (6) | Annualized. |
9
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Financial
Highlights — continued
| Class C | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 12.690 | $ 13.230 | $ 12.890 | $ 12.220 | $ 12.100 | $ 11.890 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.057 | $ 0.084 | $ 0.116 | $ 0.142 | $ 0.134 | $ 0.118 |
| Net realized and unrealized gain (loss) | (0.620) | (0.540) | 0.340 | 0.670 | 0.120 | 0.210 |
| Total income (loss) from operations | $ (0.563) | $ (0.456) | $ 0.456 | $ 0.812 | $ 0.254 | $ 0.328 |
| Less Distributions | ||||||
| From net investment income | $ (0.057) | $ (0.084) | $ (0.116) | $ (0.142) | $ (0.134) | $ (0.118) |
| Total distributions | $ (0.057) | $ (0.084) | $ (0.116) | $ (0.142) | $ (0.134) | $ (0.118) |
| Net asset value — End of period | $12.070 | $12.690 | $13.230 | $12.890 | $12.220 | $12.100 |
| Total Return(1)(2) | (4.44)% (3) | (3.47)% | 3.56% | 6.68% | 2.12% | 2.75% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 24,087 | $ 30,795 | $ 37,239 | $ 41,689 | $ 45,309 | $ 55,476 |
| Ratios (as a percentage of average daily net assets):(4) | ||||||
| Expenses (2) | 1.40% (5)(6) | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
| Net investment income | 0.95% (6) | 0.64% | 0.91% | 1.13% | 1.11% | 0.96% |
| Portfolio Turnover of the Portfolio | 34% (3) | 22% | 51% | 28% | 78% | 35% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and the sub-adviser of the Fund and the investment adviser and the sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.03%, 0.01%, 0.03%, 0.02%, 0.04% and 0.05% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of the Portfolio's adviser fee due to the Portfolio's investment in the Liquidity Fund (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (6) | Annualized. |
10
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Financial
Highlights — continued
| Class I | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 12.690 | $ 13.230 | $ 12.890 | $ 12.210 | $ 12.100 | $ 11.890 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.117 | $ 0.215 | $ 0.245 | $ 0.268 | $ 0.255 | $ 0.240 |
| Net realized and unrealized gain (loss) | (0.630) | (0.540) | 0.340 | 0.680 | 0.110 | 0.210 |
| Total income (loss) from operations | $ (0.513) | $ (0.325) | $ 0.585 | $ 0.948 | $ 0.365 | $ 0.450 |
| Less Distributions | ||||||
| From net investment income | $ (0.117) | $ (0.215) | $ (0.245) | $ (0.268) | $ (0.255) | $ (0.240) |
| Total distributions | $ (0.117) | $ (0.215) | $ (0.245) | $ (0.268) | $ (0.255) | $ (0.240) |
| Net asset value — End of period | $ 12.060 | $ 12.690 | $ 13.230 | $ 12.890 | $ 12.210 | $ 12.100 |
| Total Return(1)(2) | (4.04)% (3) | (2.49)% | 4.60% | 7.83% | 3.06% | 3.79% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $596,805 | $825,332 | $776,298 | $596,099 | $472,656 | $510,220 |
| Ratios (as a percentage of average daily net assets):(4) | ||||||
| Expenses (2) | 0.40% (5)(6) | 0.40% | 0.40% | 0.40% | 0.40% | 0.40% |
| Net investment income | 1.95% (6) | 1.64% | 1.89% | 2.12% | 2.11% | 1.94% |
| Portfolio Turnover of the Portfolio | 34% (3) | 22% | 51% | 28% | 78% | 35% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | The investment adviser and administrator and the sub-adviser of the Fund and the investment adviser and the sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.03%, 0.01%, 0.03%, 0.02%, 0.04% and 0.05% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of the Portfolio's adviser fee due to the Portfolio's investment in the Liquidity Fund (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (6) | Annualized. |
11
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Notes to Financial
Statements (Unaudited)
1 Significant Accounting Policies
Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund (the
Fund) is a diversified series of Eaton Vance Municipals Trust II (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company.
The Fund offers three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note
5). Effective November 5, 2020, Class C shares automatically convert to Class A shares eight years after their purchase as described in the Fund’s prospectus. Class I shares are sold at net asset value and are not subject to a sales charge.
Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than
class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses.
The Fund invests all of its investable assets in interests in 5-to-15 Year Laddered Municipal Bond Portfolio (the Portfolio), a Massachusetts business trust, having the same investment objective and policies as the Fund. The value of the
Fund’s investment in the Portfolio reflects the Fund’s proportionate interest in the net assets of the Portfolio (99.8% at July 31, 2022). The performance of the Fund is directly affected by the performance of the Portfolio. The
financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.
The following is a summary of significant accounting policies
of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting
Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment
Valuation—Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio's Notes to
Financial Statements, which are included elsewhere in this report.
B Income— The Fund's net investment income or loss consists of the Fund's pro-rata share of the net investment income or loss of the Portfolio, less all
actual and accrued expenses of the Fund.
C Federal
Taxes—The 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. The Fund intends to satisfy conditions which will enable it to designate distributions from the interest income generated by the Portfolio’s investments in municipal obligations, which are exempt
from regular federal income tax when received by the Portfolio, as exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to
shareholders.
As of July 31, 2022, the Fund had no
uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue
Service for a period of three years from the date of filing.
D Expenses—The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific
fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of
Estimates—The preparation of the financial statements in conformity with U.S. GAAP 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.
F Indemnifications—Under the Trust’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal
liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume, upon request by the
shareholder, 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, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other—Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements—The interim financial statements relating to July 31, 2022 and for the six months then ended have not been
audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial
statements.
12
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
2 Distributions to Shareholders and Income Tax
Information
The Fund declares dividends daily to
shareholders of record at the time of declaration. Distributions are generally paid monthly. Distributions of realized capital gains are made at least annually. Distributions are declared separately for each class of shares. Shareholders may
reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders
are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are 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.
At January 31, 2022, the Fund, for federal income tax purposes,
had deferred capital losses of $4,620,910 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of
distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year and
retain the same short-term or long-term character as when originally deferred. Of the deferred capital losses at January 31, 2022, $4,620,910 are short-term.
3 Investment Adviser and Administration Fee and
Other Transactions with Affiliates
The investment adviser
and administration fee is earned by Eaton Vance Management (EVM), an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory and administrative services rendered to the Fund. The investment adviser and
administration fee is computed at an annual rate as a percentage of the Fund’s average daily net assets that are not invested in other investment companies for which EVM or its affiliates serve as investment adviser and receive an advisory fee
as follows and is payable monthly:
| Average Daily Net Assets | Annual Fee Rate |
| Up to $1 billion | 0.3200% |
| $1 billion but less than $2.5 billion | 0.3075% |
| $2.5 billion but less than $5 billion | 0.2950% |
| $5 billion and over | 0.2875% |
For the six months ended July 31,
2022, the Fund incurred no investment adviser and administration fee on such assets. To the extent the Fund’s assets are invested in the Portfolio, the Fund is allocated its pro-rata share of the Portfolio’s investment adviser fee. The
Portfolio has engaged Boston Management and Research (BMR) to render investment advisory services. See Note 2 of the Portfolio’s Notes to Financial Statements which are included elsewhere in this report.
Pursuant to an investment sub-advisory agreement, EVM has
delegated the investment management of the Fund to Parametric Portfolio Associates LLC (Parametric), an affiliate of EVM and an indirect, wholly-owned subsidiary of Morgan Stanley. EVM pays Parametric a portion of its investment adviser and
administration fee for sub-advisory services provided to the Fund.
EVM and Parametric have agreed to reimburse the Fund’s
expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only and excluding such expenses as borrowing costs, taxes or litigation expenses) exceed 0.65%, 1.40% and 0.40% of the Fund’s average daily
net assets for Class A, Class C and Class I, respectively. This agreement may be changed or terminated after May 31, 2023. Pursuant to this agreement, EVM and Parametric were allocated $66,168 in total of the Fund’s operating expenses for the
six months ended July 31, 2022.
EVM provides sub-transfer
agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended July 31, 2022, EVM earned $4,358 from the Fund pursuant to such agreement, which is included in transfer and dividend
disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $1,142 as its portion of the sales charge on sales of
Class A shares for the six months ended July 31, 2022. EVD also received distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of
EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Certain officers and Trustees of the Fund and the Portfolio are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares
(Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and
facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended July 31, 2022 amounted to $92,104 for Class A
shares.
13
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
The
Fund also has in effect a distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to
Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended July 31, 2022, the Fund paid or accrued to EVD $99,737 for Class C shares.
Pursuant to the Class C Plan, the Fund also makes payments of
service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of
shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended July 31, 2022 amounted to $33,246 for Class C shares.
Distribution and service fees are subject to the limitations
contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is
imposed on redemptions of Class C shares made within 12 months of purchase. Class A shares may be subject to a 0.75% (1% prior to April 29, 2022) CDSC if redeemed within 12 months (18 months prior to April 29, 2022) of purchase (depending on the
circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six
months ended July 31, 2022, the Fund was informed that EVD received approximately $7,000 and $1,000 of CDSCs paid by Class A and Class C shareholders, respectively.
6 Investment Transactions
For the six months ended July 31, 2022, increases and decreases
in the Fund's investment in the Portfolio aggregated $19,756,598 and $225,684,177, respectively. In addition, a Portfolio transaction fee is imposed by the Portfolio on the combined daily inflows or outflows of the Fund and the Portfolio’s
other investors as more fully described at Note 1H of the Portfolio’s financial statements included herein. Such fee is allocated to the Fund based on its pro-rata interest in the Portfolio. The amount of the Portfolio transaction fee imposed
on the Fund, if any, and the allocation of such fee are presented as Other capital on the Statements of Changes in Net Assets.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | ||||
| Shares | Amount | Shares | Amount | ||
| Class A | |||||
| Sales | 572,976 | $ 6,967,194 | 1,058,328 | $ 13,882,492 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 41,133 | 496,738 | 70,602 | 923,920 | |
| Redemptions | (1,355,545) | (16,342,004) | (1,416,785) | (18,585,038) | |
| Converted from Class C shares | 15,699 | 185,548 | 14,622 | 191,346 | |
| Net decrease | (725,737) | $ (8,692,524) | (273,233) | $ (3,587,280) | |
| Class C | |||||
| Sales | 63,641 | $ 771,108 | 253,506 | $ 3,320,306 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 8,239 | 99,524 | 13,279 | 173,741 | |
| Redemptions | (486,123) | (5,854,999) | (640,444) | (8,395,703) | |
| Converted to Class A shares | (15,701) | (185,548) | (14,628) | (191,346) | |
| Net decrease | (429,944) | $ (5,169,915) | (388,287) | $ (5,093,002) | |
14
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | ||||
| Shares | Amount | Shares | Amount | ||
| Class I | |||||
| Sales | 9,915,906 | $ 119,238,111 | 18,257,870 | $ 239,662,679 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 443,591 | 5,358,664 | 819,220 | 10,714,522 | |
| Redemptions | (25,928,426) | (310,914,414) | (12,724,163) | (166,794,634) | |
| Net increase (decrease) | (15,568,929) | $(186,317,639) | 6,352,927 | $ 83,582,567 | |
15
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited)
16
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
17
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
18
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
19
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
20
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
21
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
22
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
23
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
24
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
| (3) | Variable rate demand obligation that may be tendered at par on any day for payment the same or next business day. The stated interest rate, which generally resets daily, is determined by the remarketing agent and represents the rate in effect at July 31, 2022. |
| (4) | Amount is less than 0.05%. |
| (5) | Variable rate demand obligation that may be tendered at par on any day for payment the lesser of 5 business days or 7 calendar days. The stated interest rate, which generally resets weekly, is determined by the remarketing agent and represents the rate in effect at July 31, 2022. |
| (6) | May be deemed to be an affiliated investment company. The rate shown is the annualized seven-day yield as of July 31, 2022. |
| At July 31, 2022, the concentration of the Portfolio's investments in the various states and territories, determined as a percentage of net assets, is as follows: | |
| New York | 16.1% |
| Others, representing less than 10% individually | 80.4% |
| The Portfolio 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. At July 31, 2022, 4.1% 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 or financial guaranty assurance agency ranged from 1.0% to 3.1% of total investments. |
| Abbreviations: | |
| AGM | – Assured Guaranty Municipal Corp. |
| BAM | – Build America Mutual Assurance Co. |
| FHLMC | – Federal Home Loan Mortgage Corp. |
| FNMA | – Federal National Mortgage Association |
| GNMA | – Government National Mortgage Association |
| Liq | – Liquidity Provider |
| PSF | – Permanent School Fund |
| SFMR | – Single Family Mortgage Revenue |
| SIFMA | – Securities Industry and Financial Markets Association Municipal Swap Index |
| SOFR | – Secured Overnight Financing Rate |
| SPA | – Standby Bond Purchase Agreement |
25
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Statement of
Assets and Liabilities (Unaudited)
| July 31, 2022 | |
| Assets | |
| Unaffiliated investments, at value (identified cost $674,562,257) | $ 667,927,768 |
| Affiliated investment, at value (identified cost $17,379,110) | 17,379,110 |
| Cash | 61,412 |
| Interest receivable | 6,531,230 |
| Dividends receivable from affiliated investment | 37,941 |
| Receivable for investments sold | 19,011,793 |
| Receivable from affiliates | 26,951 |
| Total assets | $710,976,205 |
| Liabilities | |
| Payable for when-issued securities | $ 18,676,031 |
| Payable to affiliate: | |
| Investment adviser fee | 179,970 |
| Accrued expenses | 120,513 |
| Total liabilities | $ 18,976,514 |
| Net Assets applicable to investors' interest in Portfolio | $691,999,691 |
26
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Statement of
Operations (Unaudited)
| Six Months Ended | |
| July 31, 2022 | |
| Investment Income | |
| Dividend income from affiliated investment | $ 64,389 |
| Interest income | 9,155,500 |
| Total investment income | $ 9,219,889 |
| Expenses | |
| Investment adviser fee | $ 1,261,621 |
| Trustees’ fees and expenses | 25,603 |
| Custodian fee | 95,780 |
| Legal and accounting services | 30,271 |
| Miscellaneous | 10,207 |
| Total expenses | $ 1,423,482 |
| Deduct: | |
| Waiver and/or reimbursement of expenses by affiliates | $ 50,003 |
| Total expense reductions | $ 50,003 |
| Net expenses | $ 1,373,479 |
| Net investment income | $ 7,846,410 |
| Realized and Unrealized Gain (Loss) | |
| Net realized gain (loss): | |
| Investment transactions | $ (24,150,971) |
| Net realized loss | $(24,150,971) |
| Change in unrealized appreciation (depreciation): | |
| Investments | $ (23,793,611) |
| Net change in unrealized appreciation (depreciation) | $(23,793,611) |
| Net realized and unrealized loss | $(47,944,582) |
| Net decrease in net assets from operations | $(40,098,172) |
27
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Statements of
Changes in Net Assets
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 7,846,410 | $ 16,140,421 |
| Net realized gain (loss) | (24,150,971) | 3,510,528 |
| Net change in unrealized appreciation (depreciation) | (23,793,611) | (43,090,606) |
| Net decrease in net assets from operations | $ (40,098,172) | $ (23,439,657) |
| Capital transactions: | ||
| Contributions | $ 19,420,169 | $ 108,966,195 |
| Withdrawals | (225,741,514) | (58,460,755) |
| Portfolio transaction fee | 368,223 | 250,960 |
| Net increase (decrease) in net assets from capital transactions | $(205,953,122) | $ 50,756,400 |
| Net increase (decrease) in net assets | $(246,051,294) | $ 27,316,743 |
| Net Assets | ||
| At beginning of period | $ 938,050,985 | $ 910,734,242 |
| At end of period | $ 691,999,691 | $938,050,985 |
28
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Financial
Highlights
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| Ratios/Supplemental Data | 2022 | 2021 | 2020 | 2019 | 2018 | |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (1) | 0.35% (2)(3) | 0.35% | 0.35% | 0.35% | 0.35% | 0.35% |
| Net investment income | 2.00% (2) | 1.69% | 1.94% | 2.17% | 2.16% | 2.01% |
| Portfolio Turnover | 34% (4) | 22% | 51% | 28% | 78% | 35% |
| Total Return(1) | (4.01)% (4) | (2.44)% | 4.66% | 7.88% | 3.11% | 3.83% |
| Net assets, end of period (000’s omitted) | $692,000 | $938,051 | $910,734 | $729,373 | $612,428 | $676,300 |
| (1) | The investment adviser and sub-adviser reimbursed certain operating expenses (equal to 0.01% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018). Absent this reimbursement, total return would be lower. |
| (2) | Annualized. |
| (3) | The investment adviser reduced a portion of its adviser fee (equal to less than 0.005% of average daily net assets for the six months ended July 31, 2022). |
| (4) | Not annualized. |
29
See Notes to Financial Statements.
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Notes to
Financial Statements (Unaudited)
1 Significant Accounting Policies
5-to-15 Year Laddered Municipal Bond Portfolio (the Portfolio)
is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objective is to seek current income exempt
from regular federal income tax. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At July 31, 2022, Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund and Eaton Vance TABS 5-to-15 Year Laddered Municipal Bond
NextShares held an interest of 99.8% and 0.2%, respectively, in the Portfolio.
The following is a summary of significant accounting policies
of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial
Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment
Valuation—The following methodologies are used to determine the market value or fair value of
investments.
Debt Obligations. Debt obligations 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 ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, 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 debt obligations purchased with a
remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Other. Investments in
management investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value as of the close of each business day.
Fair Valuation. 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 the Portfolio in a manner that most fairly reflects
the security’s “fair value”, which is the amount that the Portfolio 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 statements, 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—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.
C Income—Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Dividend income is
recorded on the ex-dividend date for dividends received in cash and/or securities.
D Federal
Taxes—The Portfolio has elected to be treated as a partnership for federal tax purposes. No provision
is made by the Portfolio for federal or state taxes on any taxable income of the Portfolio because each investor in the Portfolio is ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the
Portfolio's investors is a regulated investment company that invests all or substantially all of its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements (under the Internal
Revenue Code) in order for its investors to satisfy them. The Portfolio will allocate, at least annually among its investors, each investor's distributive share of the Portfolio's net investment income, net realized capital gains and losses and any
other items of income, gain, loss, deduction or credit.
As of July 31, 2022, the Portfolio had no uncertain tax
positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for
a period of three years from the date of filing.
E Use of
Estimates—The preparation of the financial statements in conformity with U.S. GAAP 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.
F Indemnifications—Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations
of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of liability on the part of Portfolio interestholders. Additionally, in the normal course of business, the Portfolio enters into agreements with
service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet
occurred.
30
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Notes to
Financial Statements (Unaudited) — continued
G When-Issued Securities and Delayed Delivery
Transactions—The Portfolio may purchase 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 Portfolio maintains cash and/or 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. Such
security purchases are subject to the risk that when delivered they will be worth less than the agreed upon payment price. Losses may also arise if the counterparty does not perform under the contract.
H Capital
Transactions—To seek to protect the Portfolio (and, indirectly, other investors in the Portfolio)
against the costs of accommodating investor inflows and outflows, the Portfolio imposes a fee (“Portfolio transaction fee”) on inflows and outflows by Portfolio investors. The Portfolio transaction fee is sized to cover the estimated
cost to the Portfolio of, in connection with issuing interests, converting the cash and/or other instruments it receives to the desired composition and, in connection with redeeming its interests, converting Portfolio holdings to cash and/or other
instruments to be distributed. Such fee, which may vary over time, is limited to amounts that have been authorized by the Board of Trustees and determined by Eaton Vance Management (EVM) to be appropriate. The maximum Portfolio transaction fee is 2%
of the amount of net contributions or withdrawals. The Portfolio transaction fee is recorded as a component of capital transactions on the Statements of Changes in Net Assets.
I Interim Financial Statements—The interim financial statements relating to July 31, 2022 and for the six months then ended have not been
audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Investment Adviser Fee
and Other Transactions with Affiliates
The investment
adviser fee is earned by Boston Management and Research (BMR), an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory services rendered to the Portfolio. The investment adviser fee is computed at an annual
rate as a percentage of the Portfolio’s average daily net assets as follows and is payable monthly:
| Average Daily Net Assets | Annual Fee Rate |
| Up to $1 billion | 0.3200% |
| $1 billion but less than $2.5 billion | 0.3075% |
| $2.5 billion but less than $5 billion | 0.2950% |
| $5 billion and over | 0.2875% |
For the six months ended July 31,
2022, the Portfolio’s investment adviser fee amounted to $1,261,621 or 0.32% (annualized) of the Portfolio’s average daily net assets. Pursuant to an investment sub-advisory agreement, BMR has delegated the investment management of the
Portfolio to Parametric Portfolio Associates LLC (Parametric), an affiliate of BMR and an indirect, wholly-owned subsidiary of Morgan Stanley. BMR pays Parametric a portion of its investment adviser fee for sub-advisory services provided to the
Portfolio. Pursuant to an expense reimbursement, BMR and Parametric were allocated $43,152 in total of the Portfolio’s operating expenses for the six months ended July 31, 2022.
Effective April 26, 2022, the Portfolio may invest in a money
market fund, the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government Portfolio (the “Liquidity Fund”), an open-end management investment company managed by Morgan Stanley Investment Management Inc., a
wholly-owned subsidiary of Morgan Stanley. The investment adviser fee paid by the Portfolio is reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity
Fund. For the six months ended July 31, 2022, the investment adviser fee paid was reduced by $6,851 relating to the Portfolio’s investment in the Liquidity Fund.
Trustees and officers of the Portfolio who are members of
EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended July 31, 2022, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers
of the above organizations.
3 Purchases and
Sales of Investments
Purchases and sales of investments,
other than short-term obligations, aggregated $269,899,643 and $460,770,943, respectively, for the six months ended July 31, 2022.
31
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Notes to
Financial Statements (Unaudited) — continued
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of
investments of the Portfolio at July 31, 2022, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $ 691,929,291 |
| Gross unrealized appreciation | $ 9,743,704 |
| Gross unrealized depreciation | (16,366,117) |
| Net unrealized depreciation | $ (6,622,413) |
5 Line of Credit
The Portfolio participates with other portfolios and funds
managed by EVM and its affiliates in an $800 million unsecured line of credit agreement with a group of banks, which is in effect through October 25, 2022. Borrowings are made by the Portfolio solely for temporary purposes related to redemptions and
other short-term cash needs. Interest is charged to the Portfolio based on its borrowings at an amount above either the Secured Overnight Financing Rate (SOFR) or Federal Funds rate. In addition, a fee computed at an annual rate of 0.15% on the
daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. In connection with the renewal of the agreement in October 2021, an arrangement fee totaling $150,000 was incurred that
was allocated to the participating portfolios and funds. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio did not have any
significant borrowings or allocated fees during the six months ended July 31, 2022.
6 Investments in Affiliated Funds
At July 31, 2022, the value of the Portfolio's investment in
affiliated funds was $17,379,110, which represents 2.5% of the Portfolio's net assets. Transactions in affiliated funds by the Portfolio for the six months ended July 31, 2022 were as follows:
| Name | Value,
beginning of period |
Purchases | Sales
proceeds |
Net
realized gain (loss) |
Change
in unrealized appreciation (depreciation) |
Value,
end of period |
Dividend
income |
Shares,
end of period |
| Short-Term Investments | ||||||||
| Liquidity Fund | $ — | $92,308,326 | $(74,929,216) | $ — | $ — | $17,379,110 | $64,389 | 17,379,110 |
7 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.
32
5-to-15 Year
Laddered Municipal Bond Portfolio
July 31, 2022
Notes to
Financial Statements (Unaudited) — continued
At
July 31, 2022, the hierarchy of inputs used in valuing the Portfolio's investments, which are carried at value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 667,927,768 | $ — | $ 667,927,768 |
| Short-Term Investments | 17,379,110 | — | — | 17,379,110 |
| Total Investments | $17,379,110 | $667,927,768 | $ — | $685,306,878 |
8 Risks and
Uncertainties
Pandemic Risk
An outbreak of respiratory disease caused by a novel
coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines,
cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and
economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and industries, and could continue to affect the market
in significant and unforeseen ways. Other epidemics and pandemics that may arise in the future may have similar effects. Any such impact could adversely affect the Portfolio's performance, or the performance of the securities in which the Portfolio
invests.
33
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
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 the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year only if its continuation is approved on an annual basis by a vote of the fund’s
board of trustees, including 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 held on June 8, 2022, the Boards of
Trustees/Directors (collectively, the “Board”) that oversee the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the “Eaton Vance Funds”), including a
majority of the independent trustees (the “Independent Trustees”), voted to approve the continuation of existing investment advisory agreements and sub-advisory
agreements1for each of the Eaton Vance Funds for an additional one-year period. The Board relied upon the affirmative recommendation of its Contract Review Committee, which is a
committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including information
specifically requested by the Board) for a series of formal meetings held between April and June 2022. Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees, to the extent
such information was relevant to the Contract Review Committee’s annual evaluation of the investment advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory
agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable to all or groups of Eaton Vance Funds, which is referenced immediately below, and information
applicable to the particular Eaton Vance Fund covered by this report (additional fund-specific information is referenced below under “Results of the Contract Review Process”). (For funds that invest through one or more underlying
portfolios, references to “each fund” in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
• A report from an independent
data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the independent data provider (“comparable funds”);
• A report from an independent
data provider comparing each fund’s total expense ratio (and its components) to those of comparable funds;
• A report from an independent
data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices,
over various time periods;
• In certain instances, data
regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in consultation with the Portfolio Management Committee of the Board (a committee exclusively comprised of Independent
Trustees);
• Comparative
information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in managing other accounts (which may include other mutual funds, collective investment funds and institutional accounts) using investment
strategies and techniques similar to those used in managing such fund(s), if any;
• Profitability analyses with
respect to the adviser and sub-adviser to each of the funds;
Information about Portfolio Management and Trading
• Descriptions of the investment
management services provided to each fund, as well as each of the funds’ investment strategies and policies;
• The procedures and processes
used to determine the value of fund assets, including, when necessary, the determination of “fair value” and actions taken to monitor and test the effectiveness of such procedures and processes;
• Information about the policies
and practices of each fund’s adviser and sub-adviser with respect to trading, including their processes for seeking best execution of portfolio transactions;
• Information about the
allocation of brokerage transactions and the benefits, if any, received by the adviser and sub-adviser to each fund as a result of brokerage allocation, including, as applicable, information concerning the acquisition of research through client
commission arrangements and policies with respect to “soft dollars”;
• Data relating to the portfolio
turnover rate of each fund and related information regarding active management in the context of particular strategies;
Information about each Adviser and Sub-adviser
• Reports detailing the
financial results and condition of the adviser and sub-adviser to each fund;
• Information regarding the
individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for portfolio managers and certain other investment professionals, information relating to their responsibilities
with respect to managing other mutual funds and investment accounts, as applicable;
1 Not all Eaton Vance Funds have entered into a sub-advisory agreement with a sub-adviser. Accordingly,
references to “sub-adviser” or “sub-advisory agreement” in this “Overview” section may not be applicable to the particular Eaton Vance Fund covered by this report. Following the “Overview” section,
further information regarding the Board’s evaluation of a fund’s contractual arrangements is included under the “Results of the Contract Review Process” section.
34
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Board of
Trustees’ Contract Approval — continued
• Information regarding the
adviser’s and its parent company’s (Morgan Stanley’s) efforts to retain and attract talented investment professionals, including in the context of a particularly competitive marketplace for talent, as well as the ongoing unique
environment presented by hybrid, remote and other alternative work arrangements;
• The Code of Ethics of the
adviser and its affiliates and the sub-adviser of each fund, together with information relating to compliance with, and the administration of, such codes;
• Policies and procedures
relating to proxy voting, including regular reporting with respect to fund proxy voting activities;
• Information regarding the
handling of corporate actions and class actions, as well as information regarding litigation and other regulatory matters;
• Information concerning the
resources devoted to compliance efforts undertaken by the adviser and its affiliates and the sub-adviser of each fund, if any, including descriptions of their various compliance programs and their record of compliance;
• Information concerning the
business continuity and disaster recovery plans of the adviser and its affiliates and the sub-adviser of each fund, if any;
• A description of Eaton Vance
Management’s and Boston Management and Research’s oversight of sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;
Other Relevant Information
• Information regarding
ongoing initiatives to further integrate and harmonize, where applicable, the investment management and other departments of the adviser and its affiliates with the overall investment management infrastructure of Morgan Stanley, in light of Morgan
Stanley’s acquisition of Eaton Vance on March 1, 2021;
• Information concerning the
nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates;
• Information concerning
oversight of the relationship with the custodian, subcustodians, fund accountants, and other third-party service providers by the adviser and/or administrator to each of the funds;
• Information concerning efforts
to implement policies and procedures with respect to various new regulations applicable to the funds, including Rule 12d1-4 (the Fund-of-Funds Rule), Rule 18f-4 (the Derivatives Rule) and Rule 2a-5 (the Fair Valuation Rule);
• For an Eaton Vance Fund
structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where relevant, the closed-end fund’s market prices (including as compared to the closed-end fund’s net
asset value (NAV)), trading volume data, continued use of auction preferred shares (where applicable), distribution rates and other relevant matters;
• The risks which the adviser
and/or its affiliates incur in connection with the management and operation of the funds, including, among others, litigation, regulatory, entrepreneurial, and other business risks (and the associated costs of such risks); and
• The terms of each investment
advisory agreement and sub-advisory agreement.
During the
various meetings of the Board and its committees over the course of the year leading up to the June 8, 2022 meeting, the Trustees received information from portfolio managers and other investment professionals of the advisers and sub-advisers of the
funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing the funds’ investment objectives. The Trustees also received information regarding risk management techniques
employed in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and
received and participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board and its committees, the
Independent Trustees held regular teleconferences to discuss, among other topics, matters relating to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review Committee was advised throughout the
contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee, with the advice of such counsel, exercised their own business judgment in determining the material
factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory agreement 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 investment advisory agreement and sub-advisory agreement. In evaluating each investment advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the
Contract Review Committee were also informed by multiple years of analysis and discussion with the adviser and sub-adviser to each of the Eaton Vance Funds.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other
information it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory and administrative agreement between Parametric TABS 5-to-15 Year
Laddered Municipal Bond Fund (the “Fund”) and Eaton Vance Management (“EVM”), as well as the investment advisory agreement between 5-to-15 Year Laddered Municipal Bond Portfolio (the “Portfolio”), the portfolio in
which the Fund invests, and Boston Management and Research (“BMR”) (EVM, with respect to the Fund, and BMR, with respect to the Portfolio, are each referred to herein as the “Adviser”), and the sub-advisory agreement between
EVM and Parametric Portfolio Associates LLC (the “Sub-adviser”), an affiliate of EVM, with respect to the Fund, as well as the sub-advisory agreement between BMR and the Sub-adviser, with respect to the Portfolio, including their
respective fee structures, are in the interests of shareholders
35
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Board of
Trustees’ Contract Approval — continued
and, therefore,
recommended to the Board approval of each agreement. Based on the recommendation of the Contract Review Committee, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory and
administrative agreement and sub-advisory agreement for the Fund and the investment advisory agreement and sub-advisory agreement for the Portfolio (collectively, the “investment advisory agreements”).
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory
agreements for the Fund and the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Fund and the Portfolio by the applicable Adviser and the Sub-adviser.
The Board considered each Adviser’s and the
Sub-adviser’s management capabilities and investment processes in light of the types of investments held by the Fund and the Portfolio, including the education, experience and number of investment professionals and other personnel who provide
portfolio management, investment research, and similar services to the Fund and the Portfolio, including recent changes to such personnel. Regarding the Adviser, the Board considered the applicable Adviser’s responsibilities with respect to
oversight of the Sub-adviser and coordinating activities in implementing the investment strategies of the Fund and the Portfolio. The Board also considered the resources available to the Sub-adviser in fulfilling its duties under the sub-advisory
agreements and the abilities and experience of the Sub-adviser’s investment professionals in implementing the investment strategies of the Fund and the Portfolio. In particular, the Board considered the abilities and experience of the
Sub-adviser’s investment professionals in the Sub-adviser’s tax-advantaged bond strategies group and the investment professionals in the Adviser’s and Sub-adviser’s municipal research groups involved in managing the Fund and
the Portfolio and other funds and accounts that invest primarily in municipal bonds and employ tax-advantaged bond and laddered strategies. The Board also took into account the resources dedicated to portfolio management and other services, the
compensation methods of each Adviser and other factors, including the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the
time and attention devoted to the Eaton Vance Funds, including the Fund and the Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations
of the Fund and the Portfolio, including the provision of administrative services. The Board also considered the business-related and other risks to which each Adviser or its affiliates may be subject in managing the Fund and the Portfolio.
The Board noted that under the terms of the investment advisory
agreement of the Fund, EVM may invest assets of the Fund directly in securities, for which it would receive a fee, or in the Portfolio, for which it receives no separate fee but for which BMR receives an advisory fee from the Portfolio.
The Board considered the compliance programs of each Adviser
and relevant affiliates thereof, including the Sub-adviser. The Board considered compliance and reporting matters regarding, among other things, personal trading by investment professionals, disclosure of portfolio holdings, late trading, frequent
trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of each 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 other administrative services provided or
overseen 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 fund complex offering exposure to a variety
of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the
Board concluded that the nature, extent and quality of services provided by each Adviser and the Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the applicable investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to
that of comparable funds identified by an independent data provider (the peer group), as well as appropriate benchmark indices. The Board’s review included comparative performance data with respect to the Fund for the one-, three-, five- and
ten-year periods ended December 31, 2021. In this regard, the Board noted that the performance of the Fund was higher than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of
the Fund was lower than its primary and secondary benchmark indexes for the three-year period. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund
and by the Portfolio for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one-year period
ended December 31, 2021, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on the Fund’s total expense ratio
relative to comparable funds.
After considering the
foregoing information, and in light of the nature, extent and quality of the services provided by each Adviser and the Sub-adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
36
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Board of
Trustees’ Contract Approval — continued
Profitability and “Fall-Out” Benefits
The Board considered the level of profits realized by each
Adviser and relevant affiliates thereof, including the Sub-adviser, in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits
realized without regard to marketing support or other payments by each Adviser and its affiliates to third parties in respect of distribution or other services.
The Board concluded that, in light of the foregoing factors and
the nature, extent and quality of the services rendered, the profits realized by each Adviser and its affiliates, including the Sub-adviser, are deemed not to be excessive.
The Board also considered direct or indirect fall-out benefits
received by each Adviser and its affiliates, including the Sub-adviser, in connection with their respective relationships with the Fund and the Portfolio, including the benefits of research services that may be available to each Adviser or the
Sub-adviser as a result of securities transactions effected for the Fund and the Portfolio and other investment advisory clients.
Economies of Scale
In reviewing management fees and profitability, the Board also
considered the extent to which the applicable Adviser and its affiliates, on the one hand, and the Fund and the Portfolio, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio
increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, 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 the 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 the Fund and the profitability of each Adviser and its affiliates may have been
affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund and the Portfolio currently share in the benefits from economies of scale, if any, when they are realized by the Adviser. The Board also concluded
that the structure of the advisory fees, which include breakpoints at several asset levels, will allow the Fund and the Portfolio to continue to benefit from any economies of scale in the future.
37
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Liquidity Risk
Management Program
The
Fund has implemented a written liquidity risk management program (Program) and related procedures to manage its liquidity in accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (Liquidity Rule). The Liquidity Rule defines
“liquidity risk” as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of the remaining investors’ interests in the fund. The Fund’s Board of Trustees/Directors has
designated the investment adviser to serve as the administrator of the Program and the related procedures. The administrator has established a Liquidity Risk Management Oversight Committee (Committee) to perform the functions necessary to administer
the Program. As part of the Program, the administrator is responsible for identifying illiquid investments and categorizing the relative liquidity of the Fund’s investments in accordance with the Liquidity Rule. Under the Program, the
administrator assesses, manages, and periodically reviews the Fund’s liquidity risk, and is responsible for making certain reports to the Fund’s Board of Trustees/Directors and the Securities and Exchange Commission (SEC) regarding the
liquidity of the Fund’s investments, and to notify the Board of Trustees/Directors and the SEC of certain liquidity events specified in the Liquidity Rule. The liquidity of the Fund’s portfolio investments is determined based on a number
of factors including, but not limited to, relevant market, trading and investment-specific considerations under the Program.
At a meeting of the Fund’s Board of Trustees/Directors on
June 7, 2022, the Committee provided a written report to the Fund’s Board of Trustees/Directors pertaining to the operation, adequacy, and effectiveness of implementation of the Program, as well as the operation of the highly liquid investment
minimum (if applicable) for the period January 1, 2021 through December 31, 2021 (Review Period). The Program operated effectively during the Review Period, supporting the administrator’s ability to assess, manage and monitor Fund liquidity
risk, including during periods of market volatility and net redemptions. During the Review Period, the Fund met redemption requests on a timely basis.
There can be no assurance that the Program will achieve its
objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
38
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
July 31, 2022
Officers and
Trustees
| Officers of Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund and 5-to-15 Year Laddered Municipal Bond Portfolio | |
| Eric
A. Stein President |
Jill R.
Damon Secretary |
| Deidre
E. Walsh Vice President and Chief Legal Officer |
Richard F.
Froio Chief Compliance Officer |
| James
F. Kirchner Treasurer |
|
| Trustees of Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund and 5-to-15 Year Laddered Municipal Bond Portfolio |
| * | Interested Trustee |
| ** | Mr. Bowser and Ms. Wiser began serving as Trustees effective April 4, 2022. |
39
Eaton Vance Funds
| Privacy Notice | April 2021 |
| FACTS | WHAT
DOES EATON VANCE DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The
types of personal information we collect and share depend on the product or service you have with us. This information can include:■ Social Security number and income ■ investment experience and risk tolerance ■ checking account number and wire transfer instructions |
| How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Eaton Vance chooses to share; and whether you can limit this sharing. |
| Reasons
we can share your personal information |
Does
Eaton Vance share? |
Can
you limit this sharing? |
| For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
| For our marketing purposes — to offer our products and services to you | Yes | No |
| For joint marketing with other financial companies | No | We don’t share |
| For our investment management affiliates’ everyday business purposes — information about your transactions, experiences, and creditworthiness | Yes | Yes |
| For our affiliates’ everyday business purposes — information about your transactions and experiences | Yes | No |
| For our affiliates’ everyday business purposes — information about your creditworthiness | No | We don’t share |
| For our investment management affiliates to market to you | Yes | Yes |
| For our affiliates to market to you | No | We don’t share |
| For nonaffiliates to market to you | No | We don’t share |
| To
limit our sharing |
Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.comPlease note:If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
| Questions? | Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.com |
40
Eaton Vance Funds
| Privacy Notice — continued | April 2021 |
Page 2
| Who we are | |
| Who is providing this notice? | Eaton Vance Management, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd., Eaton Vance Global Advisors Limited, Eaton Vance Management’s Real Estate Investment Group, Boston Management and Research, Calvert Research and Management, Eaton Vance and Calvert Fund Families and our investment advisory affiliates (“Eaton Vance”) (see Investment Management Affiliates definition below) |
| What we do | |
| How
does Eaton Vance protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information. |
| How
does Eaton Vance collect my personal information? |
We
collect your personal information, for example, when you■ open an account or make deposits or withdrawals from your account ■ buy securities from us or make a wire transfer ■ give us your contact informationWe also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can’t I limit all sharing? | Federal
law gives you the right to limit only■ sharing for affiliates’ everyday business purposes — information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to youState laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
| Definitions | |
| Investment
Management Affiliates |
Eaton Vance Investment Management Affiliates include registered investment advisers, registered broker- dealers, and registered and unregistered funds. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.■ Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.■ Eaton Vance does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.■ Eaton Vance doesn’t jointly market. |
| Other important information | |
| Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Nonaffiliates unless you provide us with your written consent to share such information.California: Except as permitted by law, we will not share personal information we collect about California residents with Nonaffiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us. | |
41
Eaton Vance Funds
IMPORTANT NOTICES
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 intermediary, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-260-0761, or contact your financial intermediary. Your instructions that householding not apply
to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial intermediary.
Portfolio
Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) files a schedule of portfolio holdings on Part F to Form N-PORT with the
SEC. Certain information filed on Form N-PORT may be viewed on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-260-0761 or in the EDGAR database on the SEC’s website at www.sec.gov.
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 1-800-260-0761 and by accessing the SEC’s website at www.sec.gov.
42
* FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the
professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to
investors at www.FINRA.org.
Parametric
TABS Laddered Municipal Bond Funds
Semiannual Report
July 31, 2022
Commodity Futures Trading Commission Registration. The Commodity Futures Trading Commission (“CFTC”) has adopted regulations that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a
prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The investment adviser has claimed an exclusion
from the definition of “commodity pool operator” under the Commodity Exchange Act with respect to its management of each Fund. Accordingly, neither the Funds nor the adviser with respect to the operation of the Funds is subject to CFTC
regulation. Because of its management of other strategies, the Funds' adviser and Parametric Portfolio Associates LLC (Parametric), sub-adviser to the Funds, are registered with the CFTC as commodity pool operators. The adviser and Parametric are
also registered as commodity trading advisors.
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.
This report must be preceded or accompanied by a current
summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and
prospectus, which can be obtained from a financial intermediary. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-260-0761.
Semiannual Report July 31, 2022
Parametric
TABS Laddered Municipal Bond Funds
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
July 31, 2022
Performance
Portfolio Manager(s) Brian C.
Barney, CFA, Devin J. Cooch, CFA and Alison Wagner, CFA, each of Parametric Portfolio Associates LLC
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
Six Months | One Year | Five Years | Since
Inception |
| Class A at NAV | 05/04/2015 | 05/04/2015 | (2.29)% | (4.93)% | 1.25% | 1.67% |
| Class A with 3.25% Maximum Sales Charge | — | — | (5.51) | (8.04) | 0.58 | 1.21 |
| Class C at NAV | 05/04/2015 | 05/04/2015 | (2.66) | (5.64) | 0.49 | 0.92 |
| Class C with 1% Maximum Sales Charge | — | — | (3.63) | (6.58) | 0.49 | 0.92 |
| Class I at NAV | 05/04/2015 | 05/04/2015 | (2.17) | (4.69) | 1.50 | 1.94 |
|
| ||||||
| Bloomberg Short-Intermediate 1-10 Year Municipal Bond Index | — | — | (1.30)% | (3.82)% | 1.47% | 1.69% |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 0.78% | 1.53% | 0.53% |
| Net | 0.65 | 1.40 | 0.40 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 1.28% | 0.53% | 1.53% |
| SEC 30-day Yield – Subsidized | 1.55 | 0.87 | 1.85 |
| SEC 30-day Yield – Unsubsidized | 1.42 | 0.73 | 1.72 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to
pay on Fund distributions or upon the redemption of Fund shares. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance for periods less than or equal to
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
eatonvance.com.
2
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
July 31, 2022
Fund Profile
| Credit Quality (% of total investments)* |
| * | For purposes of the Fund’s rating restrictions, ratings are based on Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), as applicable. If securities are rated differently by the ratings agencies, the highest rating is applied. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by S&P or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality. Credit ratings are based largely on the ratings agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and 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. Holdings designated as “Not Rated” (if any) are not rated by the national ratings agencies stated above. |
3
Parametric
TABS 10-to-20 Year Laddered Municipal Bond Fund
July 31, 2022
Performance
Portfolio Manager(s) Brian C.
Barney, CFA, Devin J. Cooch, CFA and Alison Wagner, CFA, each of Parametric Portfolio Associates LLC
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
Six Months | One Year | Five Years | Since
Inception |
| Class A at NAV | 05/04/2015 | 05/04/2015 | (7.44)% | (10.84)% | 2.18% | 3.13% |
| Class A with 3.25% Maximum Sales Charge | — | — | (10.47) | (13.74) | 1.50 | 2.66 |
| Class C at NAV | 05/04/2015 | 05/04/2015 | (7.79) | (11.58) | 1.40 | 2.36 |
| Class C with 1% Maximum Sales Charge | — | — | (8.70) | (12.44) | 1.40 | 2.36 |
| Class I at NAV | 05/04/2015 | 05/04/2015 | (7.24) | (10.53) | 2.44 | 3.41 |
|
| ||||||
| Bloomberg 15 Year Municipal Bond Index | — | — | (4.84)% | (8.19)% | 2.36% | 2.91% |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 1.18% | 1.93% | 0.93% |
| Net | 0.65 | 1.40 | 0.40 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 2.33% | 1.59% | 2.57% |
| SEC 30-day Yield – Subsidized | 2.58 | 1.93 | 2.91 |
| SEC 30-day Yield – Unsubsidized | 1.67 | 0.99 | 2.00 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to
pay on Fund distributions or upon the redemption of Fund shares. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance for periods less than or equal to
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
eatonvance.com.
4
Parametric
TABS 10-to-20 Year Laddered Municipal Bond Fund
July 31, 2022
Fund Profile
| Credit Quality (% of total investments)* |
| * | For purposes of the Fund’s rating restrictions, ratings are based on Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), as applicable. If securities are rated differently by the ratings agencies, the highest rating is applied. Ratings, which are subject to change, apply to the creditworthiness of the issuers of the underlying securities and not to the Fund or its shares. Credit ratings measure the quality of a bond based on the issuer’s creditworthiness, with ratings ranging from AAA, being the highest, to D, being the lowest based on S&P’s measures. Ratings of BBB or higher by S&P or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality. Credit ratings are based largely on the ratings agency’s analysis at the time of rating. The rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition and 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. Holdings designated as “Not Rated” (if any) are not rated by the national ratings agencies stated above. |
5
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Endnotes and
Additional Disclosures
| 1 | Bloomberg Short-Intermediate 1-10 Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 1-10 years. Bloomberg 15 Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 12-17 years. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
| 2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. |
| 3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 5/31/23. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. Performance reflects expenses waived and/or reimbursed, if applicable. Without such waivers and/or reimbursements, performance would have been lower. |
| 4 | The Distribution Rate is based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV at the end of the period. The Fund’s distributions may be comprised of amounts characterized for federal income tax purposes as tax-exempt income, qualified and non-qualified ordinary dividends, capital gains and nondividend distributions, also known as return of capital. The Fund will determine the federal income tax character of distributions paid to a shareholder after the end of the calendar year. This is reported on the IRS form 1099-DIV and provided to the shareholder shortly after each year-end. The Fund’s distributions are determined by the investment adviser based on its current assessment of the Fund’s long-term return potential. As portfolio and market conditions change, the rate of distributions paid by the Fund could change. The SEC Yield is a standardized measure based on the estimated yield to maturity of a fund’s investments over a 30-day period and is based on the maximum offer price at the date specified. The SEC Yield is not based on the distributions made by the Fund, which may differ. Subsidized yield reflects the effect of fee waivers and expense reimbursements. |
| Fund profiles subject to change due to active management. |
6
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for
the entire period (February 1, 2022 to July 31, 2022).
Actual Expenses
The first section of each table below provides information
about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Hypothetical Example for Comparison Purposes
The second section of each table below provides information
about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with
the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in each table are meant to
highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Parametric TABS 1-to-10 Year Laddered Municipal Bond
Fund
| Beginning
Account Value (2/1/22) |
Ending
Account Value (7/31/22) |
Expenses
Paid During Period* (2/1/22 – 7/31/22) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $ 977.10 | $3.19** | 0.65% |
| Class C | $1,000.00 | $ 973.40 | $6.85** | 1.40% |
| Class I | $1,000.00 | $ 978.30 | $1.96** | 0.40% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,021.57 | $3.26** | 0.65% |
| Class C | $1,000.00 | $1,017.85 | $7.00** | 1.40% |
| Class I | $1,000.00 | $1,022.81 | $2.01** | 0.40% |
| * | Expenses are equal to the Fund's annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, 2022. |
| ** | Absent an allocation of certain expenses to affiliates, expenses would be higher. |
7
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Fund
Expenses — continued
Parametric TABS 10-to-20 Year Laddered Municipal Bond
Fund
| Beginning
Account Value (2/1/22) |
Ending
Account Value (7/31/22) |
Expenses
Paid During Period* (2/1/22 – 7/31/22) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $ 925.60 | $3.10** | 0.65% |
| Class C | $1,000.00 | $ 922.10 | $6.67** | 1.40% |
| Class I | $1,000.00 | $ 927.60 | $1.91** | 0.40% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,021.57 | $3.26** | 0.65% |
| Class C | $1,000.00 | $1,017.85 | $7.00** | 1.40% |
| Class I | $1,000.00 | $1,022.81 | $2.01** | 0.40% |
| * | Expenses are equal to the Fund's annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, 2022. |
| ** | Absent an allocation of certain expenses to affiliates, expenses would be higher. |
8
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited)
9
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
10
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
11
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
12
See Notes to Financial Statements.
Parametric
TABS 10-to-20 Year Laddered Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited)
13
See Notes to Financial Statements.
Parametric
TABS 10-to-20 Year Laddered Municipal Bond Fund
July 31, 2022
Portfolio of
Investments (Unaudited) — continued
14
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Statements of Assets
and Liabilities (Unaudited)
| July 31, 2022 | ||
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Assets | ||
| Unaffiliated investments, at value (identified cost $75,957,748 and 10,410,777, respectively) | $ 75,266,688 | $ 10,200,337 |
| Affiliated investment, at value (identified cost $9,072,724 and 1,013,601, respectively) | 9,072,724 | 1,013,601 |
| Cash | 315 | — |
| Interest receivable | 527,653 | 107,161 |
| Dividends receivable from affiliated investment | 8,251 | 788 |
| Receivable for investments sold | 6,150,553 | 749,937 |
| Receivable for Fund shares sold | 840,257 | — |
| Receivable from affiliates | 20,086 | 16,733 |
| Total assets | $91,886,527 | $12,088,557 |
| Liabilities | ||
| Payable for when-issued securities | $ 5,067,366 | $ 259,560 |
| Payable for Fund shares redeemed | 596,796 | 47,235 |
| Payable to affiliates: | ||
| Investment adviser and administration fee | 21,944 | 3,142 |
| Distribution and service fees | 5,081 | 844 |
| Accrued expenses | 62,479 | 29,412 |
| Total liabilities | $ 5,753,666 | $ 340,193 |
| Net Assets | $86,132,861 | $11,748,364 |
| Sources of Net Assets | ||
| Paid-in capital | $ 87,740,974 | $ 12,760,930 |
| Accumulated loss | (1,608,113) | (1,012,566) |
| Net Assets | $86,132,861 | $11,748,364 |
| Class A Shares | ||
| Net Assets | $ 10,476,871 | $ 3,156,557 |
| Shares Outstanding | 1,018,312 | 306,618 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.29 | $ 10.29 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 10.64 | $ 10.64 |
| Class C Shares | ||
| Net Assets | $ 3,345,023 | $ 217,397 |
| Shares Outstanding | 325,103 | 21,118 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 10.29 | $ 10.29 |
| Class I Shares | ||
| Net Assets | $ 72,310,967 | $ 8,374,410 |
| Shares Outstanding | 7,020,263 | 813,374 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.30 | $ 10.30 |
| On sales of $100,000 or more, the offering price of Class A shares is reduced. | |
| * | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
15
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Statements of
Operations (Unaudited)
| Six Months Ended July 31, 2022 | ||
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Investment Income | ||
| Dividend income from affiliated investments | $ 21,563 | $ 3,728 |
| Interest income | 755,077 | 198,473 |
| Total investment income | $ 776,640 | $ 202,201 |
| Expenses | ||
| Investment adviser and administration fee | $ 141,720 | $ 24,480 |
| Distribution and service fees: | ||
| Class A | 16,018 | 4,631 |
| Class C | 16,897 | 1,686 |
| Trustees’ fees and expenses | 3,317 | 690 |
| Custodian fee | 15,355 | 9,653 |
| Transfer and dividend disbursing agent fees | 16,921 | 4,271 |
| Legal and accounting services | 20,913 | 18,171 |
| Printing and postage | 4,650 | 43 |
| Registration fees | 27,842 | 21,498 |
| Miscellaneous | 5,499 | 4,046 |
| Total expenses | $ 269,132 | $ 89,169 |
| Deduct: | ||
| Waiver and/or reimbursement of expenses by affiliates | $ 61,729 | $ 52,740 |
| Total expense reductions | $ 61,729 | $ 52,740 |
| Net expenses | $ 207,403 | $ 36,429 |
| Net investment income | $ 569,237 | $ 165,772 |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss): | ||
| Investment transactions | $ (986,888) | $ (812,012) |
| Investment transactions - affiliated investment | (457) | 230 |
| Net realized loss | $ (987,345) | $ (811,782) |
| Change in unrealized appreciation (depreciation): | ||
| Investments | $ (1,898,236) | $ (806,834) |
| Investments - affiliated investment | 1 | — |
| Net change in unrealized appreciation (depreciation) | $(1,898,235) | $ (806,834) |
| Net realized and unrealized loss | $(2,885,580) | $(1,618,616) |
| Net decrease in net assets from operations | $(2,316,343) | $(1,452,844) |
16
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Statements of Changes
in Net Assets
| Six Months Ended July 31, 2022 (Unaudited) | ||
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 569,237 | $ 165,772 |
| Net realized loss | (987,345) | (811,782) |
| Net change in unrealized appreciation (depreciation) | (1,898,235) | (806,834) |
| Net decrease in net assets from operations | $ (2,316,343) | $ (1,452,844) |
| Distributions to shareholders: | ||
| Class A | $ (70,976) | $ (37,455) |
| Class C | (6,158) | (2,105) |
| Class I | (494,093) | (126,453) |
| Total distributions to shareholders | $ (571,227) | $ (166,013) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (3,596,507) | $ (1,607,476) |
| Class C | (143,145) | (219,371) |
| Class I | (904,014) | (4,710,852) |
| Net decrease in net assets from Fund share transactions | $ (4,643,666) | $ (6,537,699) |
| Net decrease in net assets | $ (7,531,236) | $ (8,156,556) |
| Net Assets | ||
| At beginning of period | $ 93,664,097 | $ 19,904,920 |
| At end of period | $86,132,861 | $11,748,364 |
17
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Statements of Changes
in Net Assets — continued
| Year Ended January 31, 2022 | ||
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 977,937 | $ 388,711 |
| Net realized gain | 185,148 | 145,251 |
| Net change in unrealized appreciation (depreciation) | (2,947,009) | (898,194) |
| Net decrease in net assets from operations | $ (1,783,924) | $ (364,232) |
| Distributions to shareholders: | ||
| Class A | $ (172,745) | $ (153,766) |
| Class C | (13,244) | (12,069) |
| Class I | (952,556) | (419,328) |
| Total distributions to shareholders | $ (1,138,545) | $ (585,163) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (7,808,204) | $ 498,946 |
| Class C | (292,649) | (21,805) |
| Class I | 11,542,612 | (2,241,076) |
| Net increase (decrease) in net assets from Fund share transactions | $ 3,441,759 | $ (1,763,935) |
| Net increase (decrease) in net assets | $ 519,290 | $ (2,713,330) |
| Net Assets | ||
| At beginning of year | $ 93,144,807 | $ 22,618,250 |
| At end of year | $93,664,097 | $19,904,920 |
18
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Financial
Highlights
| 1-to-10 Year Laddered Fund — Class A | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 10.590 | $ 10.910 | $ 10.600 | $ 10.240 | $ 10.170 | $ 10.120 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.058 | $ 0.102 | $ 0.132 | $ 0.172 | $ 0.157 | $ 0.129 |
| Net realized and unrealized gain (loss) | (0.301) | (0.303) | 0.308 | 0.360 | 0.070 | 0.050 |
| Total income (loss) from operations | $ (0.243) | $ (0.201) | $ 0.440 | $ 0.532 | $ 0.227 | $ 0.179 |
| Less Distributions | ||||||
| From net investment income | $ (0.057) | $ (0.100) | $ (0.130) | $ (0.172) | $ (0.157) | $ (0.129) |
| From net realized gain | — | (0.019) | — | — | — | — |
| Total distributions | $ (0.057) | $ (0.119) | $ (0.130) | $ (0.172) | $ (0.157) | $ (0.129) |
| Net asset value — End of period | $10.290 | $10.590 | $10.910 | $10.600 | $10.240 | $10.170 |
| Total Return(1)(2) | (2.29)% (3) | (1.87)% | 4.19% | 5.23% | 2.26% | 1.76% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 10,477 | $ 14,526 | $ 22,853 | $ 19,901 | $ 17,978 | $ 16,877 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 0.65% (4)(5) | 0.65% | 0.65% | 0.65% | 0.65% | 0.65% |
| Net investment income | 1.11% (4) | 0.92% | 1.23% | 1.64% | 1.56% | 1.25% |
| Portfolio Turnover | 30% (3) | 34% | 81% | 41% | 91% | 19% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and the sub-adviser reimbursed certain operating expenses (equal to 0.13%, 0.13%, 0.16%, 0.18%, 0.20% and 0.24% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of its investment adviser and administration fee due to the Fund’s investment in the Liquidity Fund (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
19
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| 1-to-10 Year Laddered Fund — Class C | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 10.590 | $ 10.910 | $ 10.590 | $ 10.240 | $ 10.170 | $ 10.120 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.019 | $ 0.019 | $ 0.053 | $ 0.093 | $ 0.081 | $ 0.052 |
| Net realized and unrealized gain (loss) | (0.300) | (0.302) | 0.318 | 0.350 | 0.070 | 0.050 |
| Total income (loss) from operations | $ (0.281) | $ (0.283) | $ 0.371 | $ 0.443 | $ 0.151 | $ 0.102 |
| Less Distributions | ||||||
| From net investment income | $ (0.019) | $ (0.018) | $ (0.051) | $ (0.093) | $ (0.081) | $ (0.052) |
| From net realized gain | — | (0.019) | — | — | — | — |
| Total distributions | $ (0.019) | $ (0.037) | $ (0.051) | $ (0.093) | $ (0.081) | $ (0.052) |
| Net asset value — End of period | $10.290 | $10.590 | $10.910 | $10.590 | $10.240 | $10.170 |
| Total Return(1)(2) | (2.66)% (3) | (2.60)% | 3.52% | 4.35% | 1.50% | 1.00% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 3,345 | $ 3,591 | $ 3,994 | $ 3,875 | $ 3,951 | $ 3,638 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 1.40% (4)(5) | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
| Net investment income | 0.36% (4) | 0.17% | 0.48% | 0.90% | 0.80% | 0.50% |
| Portfolio Turnover | 30% (3) | 34% | 81% | 41% | 91% | 19% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and the sub-adviser reimbursed certain operating expenses (equal to 0.13%, 0.13%, 0.16%, 0.18%, 0.20% and 0.24% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of its investment adviser and administration fee due to the Fund’s investment in the Liquidity Fund (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
20
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| 1-to-10 Year Laddered Fund — Class I | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 10.600 | $ 10.920 | $ 10.610 | $ 10.250 | $ 10.180 | $ 10.130 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.069 | $ 0.127 | $ 0.159 | $ 0.198 | $ 0.182 | $ 0.156 |
| Net realized and unrealized gain (loss) | (0.299) | (0.301) | 0.308 | 0.360 | 0.070 | 0.050 |
| Total income (loss) from operations | $ (0.230) | $ (0.174) | $ 0.467 | $ 0.558 | $ 0.252 | $ 0.206 |
| Less Distributions | ||||||
| From net investment income | $ (0.070) | $ (0.127) | $ (0.157) | $ (0.198) | $ (0.182) | $ (0.156) |
| From net realized gain | — | (0.019) | — | — | — | — |
| Total distributions | $ (0.070) | $ (0.146) | $ (0.157) | $ (0.198) | $ (0.182) | $ (0.156) |
| Net asset value — End of period | $10.300 | $10.600 | $10.920 | $10.610 | $10.250 | $10.180 |
| Total Return(1)(2) | (2.17)% (3) | (1.62)% | 4.45% | 5.49% | 2.51% | 2.03% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 72,311 | $ 75,548 | $ 66,298 | $ 47,792 | $ 31,936 | $ 42,106 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 0.40% (4)(5) | 0.40% | 0.40% | 0.40% | 0.40% | 0.40% |
| Net investment income | 1.36% (4) | 1.17% | 1.46% | 1.88% | 1.79% | 1.51% |
| Portfolio Turnover | 30% (3) | 34% | 81% | 41% | 91% | 19% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | The investment adviser and administrator and the sub-adviser reimbursed certain operating expenses (equal to 0.13%, 0.13%, 0.16%, 0.18%, 0.20% and 0.24% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of its investment adviser and administration fee due to the Fund’s investment in the Liquidity Fund (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
21
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| 10-to-20 Year Laddered Fund — Class A | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 11.230 | $ 11.730 | $ 11.410 | $ 10.560 | $ 10.530 | $ 10.260 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.106 | $ 0.198 | $ 0.218 | $ 0.275 | $ 0.272 | $ 0.255 |
| Net realized and unrealized gain (loss) | (0.941) | (0.389) | 0.492 | 0.870 | 0.068 | 0.270 |
| Total income (loss) from operations | $ (0.835) | $ (0.191) | $ 0.710 | $ 1.145 | $ 0.340 | $ 0.525 |
| Less Distributions | ||||||
| From net investment income | $ (0.105) | $ (0.198) | $ (0.215) | $ (0.277) | $ (0.271) | $ (0.255) |
| From net realized gain | — | (0.111) | (0.175) | (0.018) | (0.039) | — |
| Total distributions | $ (0.105) | $ (0.309) | $ (0.390) | $ (0.295) | $ (0.310) | $ (0.255) |
| Net asset value — End of period | $10.290 | $11.230 | $11.730 | $11.410 | $10.560 | $10.530 |
| Total Return(1)(2) | (7.44)% (3) | (1.69)% | 6.35% | 10.97% | 3.30% | 5.14% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 3,157 | $ 5,139 | $ 4,881 | $ 970 | $ 297 | $ 336 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 0.65% (4)(5) | 0.65% | 0.65% | 0.65% | 0.65% | 0.65% |
| Net investment income | 2.02% (4) | 1.69% | 1.79% | 2.45% | 2.59% | 2.44% |
| Portfolio Turnover | 34% (3) | 24% | 62% | 33% | 44% | 53% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and the sub-adviser reimbursed certain operating expenses (equal to 0.69%, 0.53%, 0.61%, 0.94%, 1.25% and 1.42% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of its investment adviser and administration fee due to the Fund’s investment in the Liquidity Fund (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
22
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| 10-to-20 Year Laddered Fund — Class C | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 11.230 | $ 11.730 | $ 11.410 | $ 10.570 | $ 10.540 | $ 10.270 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.072 | $ 0.111 | $ 0.135 | $ 0.193 | $ 0.194 | $ 0.176 |
| Net realized and unrealized gain (loss) | (0.946) | (0.389) | 0.490 | 0.859 | 0.068 | 0.270 |
| Total income (loss) from operations | $ (0.874) | $ (0.278) | $ 0.625 | $ 1.052 | $ 0.262 | $ 0.446 |
| Less Distributions | ||||||
| From net investment income | $ (0.066) | $ (0.111) | $ (0.130) | $ (0.194) | $ (0.193) | $ (0.176) |
| From net realized gain | — | (0.111) | (0.175) | (0.018) | (0.039) | — |
| Total distributions | $ (0.066) | $ (0.222) | $ (0.305) | $ (0.212) | $ (0.232) | $ (0.176) |
| Net asset value — End of period | $10.290 | $11.230 | $11.730 | $11.410 | $10.570 | $10.540 |
| Total Return(1)(2) | (7.79)% (3) | (2.43)% | 5.56% | 10.04% | 2.53% | 4.35% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 217 | $ 476 | $ 522 | $ 521 | $ 331 | $ 380 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 1.40% (4)(5) | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
| Net investment income | 1.25% (4) | 0.95% | 1.14% | 1.73% | 1.85% | 1.66% |
| Portfolio Turnover | 34% (3) | 24% | 62% | 33% | 44% | 53% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
| (2) | The investment adviser and administrator and the sub-adviser reimbursed certain operating expenses (equal to 0.69%, 0.53%, 0.61%, 0.94%, 1.25% and 1.42% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of its investment adviser and administration fee due to the Fund’s investment in the Liquidity Fund (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
23
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Financial
Highlights — continued
| 10-to-20 Year Laddered Fund — Class I | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year Ended January 31, | |||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net asset value — Beginning of period | $ 11.230 | $ 11.730 | $ 11.410 | $ 10.560 | $ 10.530 | $ 10.270 |
| Income (Loss) From Operations | ||||||
| Net investment income | $ 0.121 | $ 0.228 | $ 0.248 | $ 0.304 | $ 0.298 | $ 0.281 |
| Net realized and unrealized gain (loss) | (0.933) | (0.390) | 0.491 | 0.869 | 0.069 | 0.261 |
| Total income (loss) from operations | $ (0.812) | $ (0.162) | $ 0.739 | $ 1.173 | $ 0.367 | $ 0.542 |
| Less Distributions | ||||||
| From net investment income | $ (0.118) | $ (0.227) | $ (0.244) | $ (0.305) | $ (0.298) | $ (0.282) |
| From net realized gain | — | (0.111) | (0.175) | (0.018) | (0.039) | — |
| Total distributions | $ (0.118) | $ (0.338) | $ (0.419) | $ (0.323) | $ (0.337) | $ (0.282) |
| Net asset value — End of period | $10.300 | $11.230 | $11.730 | $11.410 | $10.560 | $10.530 |
| Total Return(1)(2) | (7.24)% (3) | (1.45)% | 6.61% | 11.25% | 3.56% | 5.30% |
| Ratios/Supplemental Data | ||||||
| Net assets, end of period (000’s omitted) | $ 8,374 | $ 14,290 | $ 17,216 | $ 12,708 | $ 8,415 | $ 8,358 |
| Ratios (as a percentage of average daily net assets): | ||||||
| Expenses (2) | 0.40% (4)(5) | 0.40% | 0.40% | 0.40% | 0.40% | 0.40% |
| Net investment income | 2.25% (4) | 1.94% | 2.10% | 2.73% | 2.85% | 2.65% |
| Portfolio Turnover | 34% (3) | 24% | 62% | 33% | 44% | 53% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | The investment adviser and administrator and the sub-adviser reimbursed certain operating expenses (equal to 0.69%, 0.53%, 0.61%, 0.94%, 1.25% and 1.42% of average daily net assets for the six months ended July 31, 2022 and the years ended January 31, 2022, 2021, 2020, 2019 and 2018, respectively). Absent this reimbursement, total return would be lower. |
| (3) | Not annualized. |
| (4) | Annualized. |
| (5) | Includes a reduction by the investment adviser and administrator of a portion of its investment adviser and administration fee due to the Fund’s investment in the Liquidity Fund (equal to less than 0.01% of average daily net assets for the six months ended July 31, 2022). |
24
See Notes to Financial Statements.
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Municipals Trust II (the Trust) is a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Trust presently consists of six funds, two of which, each diversified, are included in these financial
statements. They include Parametric TABS 1-to-10 Year Laddered Municipal Bond Fund (1-to-10 Year Laddered Fund) and Parametric TABS 10-to-20 Year Laddered Municipal Bond Fund (10-to-20 Year Laddered Fund) (each individually referred to as the Fund,
and collectively, the Funds). The Funds’ investment objective is to provide current income exempt from regular federal income tax. The Funds offer three classes of shares. Class A shares are generally sold subject to a sales charge imposed at
time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Effective November 5, 2020, Class C shares automatically convert to Class A shares eight years after their
purchase as described in the Funds’ prospectus. Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as
noted below) is subject to different expenses. Realized and unrealized gains and losses are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Net investment income, other than
class-specific expenses, is allocated daily to each class of shares based upon the ratio of the value of each class’s paid shares to the total value of all paid shares. Each class of shares differs in its distribution plan and certain other
class-specific expenses.
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 (U.S. GAAP). Each Fund is an investment company and follows accounting and reporting guidance
in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment
Valuation—The following methodologies are used to determine the market value or fair value of
investments.
Debt Obligations. Debt obligations 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 ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, 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 debt obligations purchased with a
remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Other. Investments in
management investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value as of the close of each business day.
Fair Valuation. 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 most fairly reflects the
security’s “fair value”, which is the amount that a 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 statements, 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.
Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities.
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. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to
shareholders.
As of July 31, 2022, the Funds had
no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal
Revenue Service for a period of three years from the date of filing.
D Expenses—The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific
fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
25
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
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 U.S. GAAP 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 the Trust’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Funds. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal
liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume, upon request by the
shareholder, 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 When-Issued Securities and Delayed Delivery
Transactions—The Funds may purchase 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 cash and/or 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. Such
security purchases are subject to the risk that when delivered they will be worth less than the agreed upon payment price. Losses may also arise if the counterparty does not perform under the contract.
I Interim Financial Statements—The interim financial statements relating to July 31, 2022 and for the six months then ended have not
been audited by an independent registered public accounting firm, but in the opinion of the Funds' management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Distributions to
Shareholders and Income Tax Information
The net
investment income of each Fund is determined daily and substantially all of the net investment income so determined is declared as a dividend to shareholders of record at the time of declaration. Distributions are declared separately for each class
of shares. Distributions are paid monthly. Distributions of realized capital gains are made at least annually. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of a Fund at the net asset value as
of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only
distributions in excess of tax basis earnings and profits are 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.
The cost and unrealized appreciation (depreciation) of
investments of each Fund at July 31, 2022, as determined on a federal income tax basis, were as follows:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Aggregate cost | $ 85,027,798 | $11,424,534 |
| Gross unrealized appreciation | $ 963,292 | $ 171,171 |
| Gross unrealized depreciation | (1,651,678) | (381,767) |
| Net unrealized depreciation | $ (688,386) | $ (210,596) |
26
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
3 Investment Adviser and Administration Fee and
Other Transactions with Affiliates
The investment adviser
and administration fee is earned by Eaton Vance Management (EVM), an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory and administrative services rendered to each Fund. The investment adviser and
administration fee is computed at an annual rate as a percentage of average daily net assets as follows and is payable monthly:
| Annual Fee Rate | ||
| Average Daily Net Assets | 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund |
| Up to $1 billion | 0.3200% | 0.3200% |
| $1 billion but less than $2.5 billion | 0.3075% | 0.3075% |
| $2.5 billion but less than $5 billion | 0.2950% | 0.2950% |
| $5 billion and over | 0.2875% | 0.2875% |
For the six months ended July 31,
2022, investment adviser and administration fees incurred by the Funds and the effective annual rates, as a percentage of average daily net assets, were as follows:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Investment Adviser and Administration Fee | $141,720 | $24,480 |
| Effective Annual Rate | 0.32% | 0.32% |
Pursuant to an investment
sub-advisory agreement, EVM has delegated the investment management of each Fund to Parametric Portfolio Associates LLC (Parametric), an affiliate of EVM and an indirect, wholly-owned subsidiary of Morgan Stanley. EVM pays Parametric a portion of
its investment adviser and administration fee for sub-advisory services provided to the Funds.
Effective April 26, 2022, the Funds may invest in a money
market fund, the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government Portfolio (the “Liquidity Fund”), an open-end management investment company managed by Morgan Stanley Investment Management Inc., a
wholly-owned subsidiary of Morgan Stanley. The investment adviser and administration fee paid by each Fund is reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by each Fund due to its investment in the
Liquidity Fund. For the six months ended July 31, 2022, the investment adviser and administration fee paid was reduced by $2,661 and $606 for 1-to-10 Year Laddered Fund and 10-to-20 Year Laddered Fund, respectively, relating to each Fund’s
investment in the Liquidity Fund. Prior to April 26, 2022, each Fund may have invested its cash in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by EVM. EVM did not receive a fee for advisory
services provided to Cash Reserves Fund.
EVM and
Parametric have agreed to reimburse each Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only and excluding such expenses as borrowing costs, taxes or litigation expenses) exceed
0.65%, 1.40% and 0.40% of each Fund’s average daily net assets for Class A, Class C and Class I, respectively. These agreements may be changed or terminated after May 31, 2023. Pursuant to these agreements, EVM and Parametric were allocated
$59,068 and $52,134 in total of operating expenses of 1-to-10 Year Laddered Fund and 10-to-20 Year Laddered Fund, respectively, for the six months ended July 31, 2022.
EVM provides sub-transfer agency and related services to the
Funds pursuant to a Sub-Transfer Agency Support Services Agreement. Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Funds’ principal underwriter, received a portion of the sales charge on sales of Class A shares of the Funds.
EVD also received distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5). Sub-transfer agent fees earned by EVM, which are included in transfer and dividend disbursing agent fees
on the Statements of Operations, and Class A sales charges that the Funds were informed were received by EVD for the six months ended July 31, 2022 were as follows:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| EVM's Sub-Transfer Agent Fees | $1,024 | $ 580 |
| EVD's Class A Sales Charges | $ 80 | $ — |
27
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
Trustees and officers of the Funds who are members of
EVM’s organization receive remuneration for their services to the Funds out of the investment adviser and administration fee. Trustees of the Funds who are not affiliated with EVM may elect to defer receipt of all or a percentage of their
annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended July 31, 2022, no significant amounts have been deferred. Certain officers and Trustees of the Funds are officers of EVM.
4 Distribution Plans
Each Fund has in effect a distribution plan for Class A shares
(Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, each Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and
facilities provided to each Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended July 31, 2022 for Class A shares amounted to the
following:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Class A Distribution and Service Fees | $16,018 | $4,631 |
Each Fund also has in effect a
distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, each Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for
providing ongoing distribution services and facilities to the respective Funds. For the six months ended July 31, 2022, the Funds paid or accrued to EVD the following distribution fees:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Class C Distribution Fees | $12,673 | $1,264 |
Pursuant to the Class C
Plan, the Funds also make payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of the average daily net assets attributable to Class C shares. Service fees paid or accrued are for
personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended July 31, 2022 amounted to the
following:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Class C Service Fees | $4,224 | $422 |
Distribution and service fees are
subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is
imposed on redemptions of Class C shares made within 12 months of purchase. Class A shares may be subject to a 0.75% (1% prior to April 29, 2022) CDSC if redeemed within 12 months (18 months prior to April 29, 2022) of purchase (depending on the
circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six
months ended July 31, 2022, the Funds were informed that EVD received approximately the following amounts of CDSCs paid by Class A and Class C shareholders:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Class A | $25,000 | $ — |
| Class C | $ 500 | $ — |
28
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term
obligations, for the six months ended July 31, 2022 were as follows:
| 1-to-10
Year Laddered Fund |
10-to-20
Year Laddered Fund | |
| Purchases | $25,693,729 | $ 4,733,717 |
| Sales | $38,455,015 | $12,095,002 |
7 Shares of Beneficial
Interest
Each Fund’s Declaration of Trust permits
the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Funds) and classes. Transactions in Fund shares were as
follows:
| 1-to-10 Year Laddered Fund | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |||||
| Shares | Amount | Shares | Amount | |||
| Class A | ||||||
| Sales | 28,560 | $ 296,362 | 556,525 | $ 6,050,061 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 6,896 | 70,776 | 15,497 | 167,915 | ||
| Redemptions | (388,836) | (3,963,645) | (1,294,640) | (14,026,180) | ||
| Net decrease | (353,380) | $ (3,596,507) | (722,618) | $ (7,808,204) | ||
| Class C | ||||||
| Sales | 24,597 | $ 249,617 | 33,698 | $ 366,553 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 600 | 6,158 | 1,221 | 13,244 | ||
| Redemptions | (39,167) | (398,920) | (61,857) | (672,446) | ||
| Net decrease | (13,970) | $ (143,145) | (26,938) | $ (292,649) | ||
| Class I | ||||||
| Sales | 2,501,238 | $ 25,706,655 | 3,090,695 | $ 33,631,922 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 48,017 | 493,372 | 87,577 | 949,843 | ||
| Redemptions | (2,654,977) | (27,104,041) | (2,122,112) | (23,039,153) | ||
| Net increase (decrease) | (105,722) | $ (904,014) | 1,056,160 | $ 11,542,612 | ||
29
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| 10-to-20 Year Laddered Fund | ||||||
| Six
Months Ended July 31, 2022 (Unaudited) |
Year
Ended January 31, 2022 | |||||
| Shares | Amount | Shares | Amount | |||
| Class A | ||||||
| Sales | 27,998 | $ 294,604 | 182,612 | $ 2,139,678 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 3,574 | 37,455 | 13,227 | 153,766 | ||
| Redemptions | (182,497) | (1,939,535) | (154,396) | (1,794,498) | ||
| Net increase (decrease) | (150,925) | $(1,607,476) | 41,443 | $ 498,946 | ||
| Class C | ||||||
| Sales | — | $ — | 15,466 | $ 182,531 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 200 | 2,105 | 1,038 | 12,069 | ||
| Redemptions | (21,434) | (221,476) | (18,628) | (216,405) | ||
| Net decrease | (21,234) | $ (219,371) | (2,124) | $ (21,805) | ||
| Class I | ||||||
| Sales | 96,606 | $ 1,029,488 | 712,417 | $ 8,326,515 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 12,055 | 126,418 | 35,986 | 418,129 | ||
| Redemptions | (567,381) | (5,866,758) | (943,932) | (10,985,720) | ||
| Net decrease | (458,720) | $(4,710,852) | (195,529) | $ (2,241,076) | ||
8 Line of Credit
The Funds participate with other portfolios and funds managed
by EVM and its affiliates in an $800 million unsecured line of credit agreement with a group of banks, which is in effect through October 25, 2022. Borrowings are made by the Funds solely for temporary purposes related to redemptions and other
short-term cash needs. Interest is charged to each Fund based on its borrowings at an amount above either the Secured Overnight Financing Rate (SOFR) or Federal Funds rate. In addition, a fee computed at an annual rate of 0.15% on the daily unused
portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. In connection with the renewal of the agreement in October 2021, an arrangement fee totaling $150,000 was incurred that was allocated
to the participating portfolios and funds. Because the line of credit is not available exclusively to the Funds, a Fund may be unable to borrow some or all of its requested amounts at any particular time. The Funds did not have any significant
borrowings or allocated fees during the six months ended July 31, 2022.
30
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
9 Investments in Affiliated Funds
At July 31, 2022, the value of the investments in affiliated
funds was $9,072,724 for 1-to-10 Year Laddered Fund, representing 10.5% of its net assets and $1,013,601 for 10-to-20 Year Laddered Fund, representing 8.7% of its net assets. Transactions in affiliated funds by the Funds for the six months ended
July 31, 2022 were as follows:
| 1-to-10 Year Laddered Fund | ||||||||
| Name | Value,
beginning of period |
Purchases | Sales
proceeds |
Net
realized gain (loss) |
Change
in unrealized appreciation (depreciation) |
Value,
end of period |
Dividend
income |
Units/Shares,
end of period |
| Short-Term Investments | ||||||||
| Cash Reserves Fund | $9,633,863 | $15,094,195 | $(24,727,602) | $ (457) | $ 1 | $ — | $ 1,729 | — |
| Liquidity Fund | — | 41,186,229 | (32,113,505) | — | — | 9,072,724 | 19,834 | 9,072,724 |
| Total | $(457) | $ 1 | $9,072,724 | $21,563 | ||||
| 10-to-20 Year Laddered Fund | ||||||||
| Name | Value,
beginning of period |
Purchases | Sales
proceeds |
Net
realized gain (loss) |
Change
in unrealized appreciation (depreciation) |
Value,
end of period |
Dividend
income |
Units/Shares,
end of period |
| Short-Term Investments | ||||||||
| Cash Reserves Fund | $1,399,552 | $3,905,604 | $(5,305,386) | $ 230 | $ — | $ — | $ 154 | — |
| Liquidity Fund | — | 9,891,942 | (8,878,341) | — | — | 1,013,601 | 3,574 | 1,013,601 |
| Total | $ 230 | $ — | $1,013,601 | $3,728 | ||||
10 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.
At July 31, 2022, the hierarchy of inputs used in valuing the
Funds' investments, which are carried at value, were as follows:
| 1-to-10 Year Laddered Fund | ||||
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 75,266,688 | $ — | $ 75,266,688 |
| Short-Term Investments | 9,072,724 | — | — | 9,072,724 |
| Total Investments | $9,072,724 | $75,266,688 | $ — | $84,339,412 |
31
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Notes to Financial
Statements (Unaudited) — continued
| 10-to-20 Year Laddered Fund | ||||
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 10,200,337 | $ — | $ 10,200,337 |
| Short-Term Investments | 1,013,601 | — | — | 1,013,601 |
| Total Investments | $1,013,601 | $10,200,337 | $ — | $11,213,938 |
11 Risks and
Uncertainties
Pandemic Risk
An outbreak of respiratory disease caused by a novel
coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines,
cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and
economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and industries, and could continue to affect the market
in significant and unforeseen ways. Other epidemics and pandemics that may arise in the future may have similar effects. Any such impact could adversely affect the Funds' performance, or the performance of the securities in which the Funds
invest.
32
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
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 the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year only if its continuation is approved on an annual basis by a vote of the fund’s
board of trustees, including 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 held on June 8, 2022, the Boards of
Trustees/Directors (collectively, the “Board”) that oversee the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the “Eaton Vance Funds”), including a
majority of the independent trustees (the “Independent Trustees”), voted to approve the continuation of existing investment advisory agreements and sub-advisory
agreements1for each of the Eaton Vance Funds for an additional one-year period. The Board relied upon the affirmative recommendation of its Contract Review Committee, which is a
committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including information
specifically requested by the Board) for a series of formal meetings held between April and June 2022. Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees, to the extent
such information was relevant to the Contract Review Committee’s annual evaluation of the investment advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory
agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable to all or groups of Eaton Vance Funds, which is referenced immediately below, and information
applicable to the particular Eaton Vance Fund covered by this report (additional fund-specific information is referenced below under “Results of the Contract Review Process”). (For funds that invest through one or more underlying
portfolios, references to “each fund” in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
• A report from an independent
data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the independent data provider (“comparable funds”);
• A report from an independent
data provider comparing each fund’s total expense ratio (and its components) to those of comparable funds;
• A report from an independent
data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices,
over various time periods;
• In certain instances, data
regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in consultation with the Portfolio Management Committee of the Board (a committee exclusively comprised of Independent
Trustees);
• Comparative
information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in managing other accounts (which may include other mutual funds, collective investment funds and institutional accounts) using investment
strategies and techniques similar to those used in managing such fund(s), if any;
• Profitability analyses with
respect to the adviser and sub-adviser to each of the funds;
Information about Portfolio Management and Trading
• Descriptions of the investment
management services provided to each fund, as well as each of the funds’ investment strategies and policies;
• The procedures and processes
used to determine the value of fund assets, including, when necessary, the determination of “fair value” and actions taken to monitor and test the effectiveness of such procedures and processes;
• Information about the policies
and practices of each fund’s adviser and sub-adviser with respect to trading, including their processes for seeking best execution of portfolio transactions;
• Information about the
allocation of brokerage transactions and the benefits, if any, received by the adviser and sub-adviser to each fund as a result of brokerage allocation, including, as applicable, information concerning the acquisition of research through client
commission arrangements and policies with respect to “soft dollars”;
• Data relating to the portfolio
turnover rate of each fund and related information regarding active management in the context of particular strategies;
Information about each Adviser and Sub-adviser
• Reports detailing the
financial results and condition of the adviser and sub-adviser to each fund;
• Information regarding the
individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for portfolio managers and certain other investment professionals, information relating to their responsibilities
with respect to managing other mutual funds and investment accounts, as applicable;
1 Not all Eaton Vance Funds have entered into a sub-advisory agreement with a sub-adviser. Accordingly,
references to “sub-adviser” or “sub-advisory agreement” in this “Overview” section may not be applicable to the particular Eaton Vance Fund covered by this report. Following the “Overview” section,
further information regarding the Board’s evaluation of a fund’s contractual arrangements is included under the “Results of the Contract Review Process” section.
33
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Board of
Trustees’ Contract Approval — continued
• Information regarding the
adviser’s and its parent company’s (Morgan Stanley’s) efforts to retain and attract talented investment professionals, including in the context of a particularly competitive marketplace for talent, as well as the ongoing unique
environment presented by hybrid, remote and other alternative work arrangements;
• The Code of Ethics of the
adviser and its affiliates and the sub-adviser of each fund, together with information relating to compliance with, and the administration of, such codes;
• Policies and procedures
relating to proxy voting, including regular reporting with respect to fund proxy voting activities;
• Information regarding the
handling of corporate actions and class actions, as well as information regarding litigation and other regulatory matters;
• Information concerning the
resources devoted to compliance efforts undertaken by the adviser and its affiliates and the sub-adviser of each fund, if any, including descriptions of their various compliance programs and their record of compliance;
• Information concerning the
business continuity and disaster recovery plans of the adviser and its affiliates and the sub-adviser of each fund, if any;
• A description of Eaton Vance
Management’s and Boston Management and Research’s oversight of sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;
Other Relevant Information
• Information regarding
ongoing initiatives to further integrate and harmonize, where applicable, the investment management and other departments of the adviser and its affiliates with the overall investment management infrastructure of Morgan Stanley, in light of Morgan
Stanley’s acquisition of Eaton Vance on March 1, 2021;
• Information concerning the
nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates;
• Information concerning
oversight of the relationship with the custodian, subcustodians, fund accountants, and other third-party service providers by the adviser and/or administrator to each of the funds;
• Information concerning efforts
to implement policies and procedures with respect to various new regulations applicable to the funds, including Rule 12d1-4 (the Fund-of-Funds Rule), Rule 18f-4 (the Derivatives Rule) and Rule 2a-5 (the Fair Valuation Rule);
• For an Eaton Vance Fund
structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where relevant, the closed-end fund’s market prices (including as compared to the closed-end fund’s net
asset value (NAV)), trading volume data, continued use of auction preferred shares (where applicable), distribution rates and other relevant matters;
• The risks which the adviser
and/or its affiliates incur in connection with the management and operation of the funds, including, among others, litigation, regulatory, entrepreneurial, and other business risks (and the associated costs of such risks); and
• The terms of each investment
advisory agreement and sub-advisory agreement.
During the
various meetings of the Board and its committees over the course of the year leading up to the June 8, 2022 meeting, the Trustees received information from portfolio managers and other investment professionals of the advisers and sub-advisers of the
funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing the funds’ investment objectives. The Trustees also received information regarding risk management techniques
employed in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and
received and participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board and its committees, the
Independent Trustees held regular teleconferences to discuss, among other topics, matters relating to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review Committee was advised throughout the
contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee, with the advice of such counsel, exercised their own business judgment in determining the material
factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory agreement 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 investment advisory agreement and sub-advisory agreement. In evaluating each investment advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the
Contract Review Committee were also informed by multiple years of analysis and discussion with the adviser and sub-adviser to each of the Eaton Vance Funds.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other
information it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory and administrative agreements between each of Parametric TABS 1-to-10
Year Laddered Municipal Bond Fund and Parametric TABS 10-to-20 Year Laddered Municipal Bond Fund (together, the “Funds”) and Eaton Vance Management (the “Adviser”) and the sub-advisory agreements between the Adviser and
Parametric Portfolio Associates LLC (the “Sub-adviser”), an affiliate of the Adviser, with respect to each Fund, including their respective fee structures, are in the interests of shareholders and, therefore, recommended to the Board
approval of each agreement. Based on the recommendation of the Contract Review Committee, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory and administrative agreement and the
sub-advisory agreement for each Fund.
34
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Board of
Trustees’ Contract Approval — continued
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory and
administrative agreements and the sub-advisory agreements for the Funds, the Board evaluated the nature, extent and quality of services provided to the Funds by the Adviser and the Sub-adviser.
The Board considered the Adviser’s and the
Sub-adviser’s management capabilities and investment processes in light of the types of investments held by each Fund, including the education, experience and number of investment professionals and other personnel who provide portfolio
management, investment research, and similar services to the Funds, including recent changes to such personnel. Regarding the Adviser, the Board considered the Adviser’s responsibilities with respect to oversight of the Sub-adviser. With
respect to the Sub-adviser, the Board considered the resources available to the Sub-adviser in fulfilling its duties under the sub-advisory agreements and the abilities and experience of Sub-adviser’s investment professionals in implementing
the investment strategies of each Fund. In particular, the Board considered the abilities and experience of the Sub-adviser’s investment professionals in the Sub-adviser’s tax-advantaged bond strategies group and the investment
professionals in the Adviser’s and Sub-adviser’s municipal research groups in managing the Funds and other funds and accounts that invest primarily in municipal bonds and employ tax-advantaged bond and laddered strategies. The Board also
took into account the resources dedicated to portfolio management and other services, the compensation methods of the Adviser and other factors, including the reputation and resources of the Adviser to recruit and retain highly qualified research,
advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including each Fund, by senior management, as well as the infrastructure, operational capabilities and
support staff in place to assist in the portfolio management and operations of the Funds, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may
be subject in managing the Funds.
The Board considered
the compliance programs of the Adviser and relevant affiliates thereof, including the Sub-adviser. The Board considered compliance and reporting matters regarding, among other things, personal trading by investment professionals, disclosure of
portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered 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 other administrative services provided or
overseen 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 fund complex offering exposure to a variety
of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the
Board concluded that the nature, extent and quality of services provided by the Adviser and the Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory and administrative agreements and the
sub-advisory agreements.
Fund Performance
The Board compared each Fund’s investment performance to
that of comparable funds identified by an independent data provider (the peer group), as well as an appropriate benchmark index. The Board’s review included comparative performance data with respect to each Fund for the one-, three- and
five-year periods ended December 31, 2021. In this regard, the Board noted that the performance of each Fund was higher than the median performance of such Fund’s peer group for the three-year period. The Board also noted that the performance
of each Fund was higher than such Fund’s benchmark index for the three-year period. The Board concluded that the performance of each Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by each Fund
for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered each Fund’s management fees and total expense ratio for the one-year period ended December 31,
2021, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on each Fund’s total expense ratio relative to
comparable funds.
After considering the foregoing
information, and in light of the nature, extent and quality of the services provided by the Adviser and the Sub-adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and “Fall-Out” Benefits
The Board considered the level of profits realized by the
Adviser and relevant affiliates thereof, including the Sub-adviser, 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 without regard
to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution or other services.
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, including the Sub-adviser, are deemed not to be excessive.
35
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Board of
Trustees’ Contract Approval — continued
The
Board also considered direct or indirect fall-out benefits received by the Adviser and its affiliates, including the Sub-adviser, in connection with their respective relationships with the Funds, including the benefits of research services that may
be available to the Adviser or the Sub-adviser as a result of securities transactions effected for the Funds and other investment advisory clients.
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 each Fund increase. The Board acknowledged the difficulty in
accurately measuring the benefits resulting from economies of scale, if any, 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. Based upon
the foregoing, the Board concluded that each Fund currently shares in the benefits from economies of scale, if any, when they are realized by the Adviser. The Board also concluded that the structure of each advisory fee, which includes breakpoints
at several asset levels, will allow each Fund to continue to benefit from any economies of scale in the future.
36
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Liquidity Risk
Management Program
Each
Fund has implemented a written liquidity risk management program (Program) and related procedures to manage its liquidity in accordance with Rule 22e-4 under the Investment Company Act of 1940, as amended (Liquidity Rule). The Liquidity Rule defines
“liquidity risk” as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of the remaining investors’ interests in the fund. Each Fund’s Board of Trustees/Directors has
designated the investment adviser to serve as the administrator of the Program and the related procedures. The administrator has established a Liquidity Risk Management Oversight Committee (Committee) to perform the functions necessary to administer
the Program. As part of the Program, the administrator is responsible for identifying illiquid investments and categorizing the relative liquidity of each Fund’s investments in accordance with the Liquidity Rule. Under the Program, the
administrator assesses, manages, and periodically reviews each Fund’s liquidity risk, and is responsible for making certain reports to the Fund’s Board of Trustees/Directors and the Securities and Exchange Commission (SEC) regarding the
liquidity of the Fund’s investments, and to notify the Board of Trustees/Directors and the SEC of certain liquidity events specified in the Liquidity Rule. The liquidity of each Fund’s portfolio investments is determined based on a
number of factors including, but not limited to, relevant market, trading and investment-specific considerations under the Program.
At a meeting of each Fund’s Board of Trustees/Directors
on June 7, 2022, the Committee provided a written report to the Fund’s Board of Trustees/Directors pertaining to the operation, adequacy, and effectiveness of implementation of the Program, as well as the operation of the highly liquid
investment minimum (if applicable) for the period January 1, 2021 through December 31, 2021 (Review Period). The Program operated effectively during the Review Period, supporting the administrator’s ability to assess, manage and monitor Fund
liquidity risk, including during periods of market volatility and net redemptions. During the Review Period, each Fund met redemption requests on a timely basis.
There can be no assurance that the Program will achieve its
objectives in the future. Please refer to each Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.
37
Parametric
TABS Laddered Municipal Bond Funds
July 31, 2022
Officers and
Trustees
| Officers | |
| Eric
A. Stein President |
Jill R.
Damon Secretary |
| Deidre
E. Walsh Vice President and Chief Legal Officer |
Richard F.
Froio Chief Compliance Officer |
| James
F. Kirchner Treasurer |
|
| Trustees |
| * | Interested Trustee |
| ** | Mr. Bowser and Ms. Wiser began serving as Trustees effective April 4, 2022. |
38
Eaton Vance Funds
| Privacy Notice | April 2021 |
| FACTS | WHAT
DOES EATON VANCE DO WITH YOUR PERSONAL INFORMATION? |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The
types of personal information we collect and share depend on the product or service you have with us. This information can include:■ Social Security number and income ■ investment experience and risk tolerance ■ checking account number and wire transfer instructions |
| How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Eaton Vance chooses to share; and whether you can limit this sharing. |
| Reasons
we can share your personal information |
Does
Eaton Vance share? |
Can
you limit this sharing? |
| For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
| For our marketing purposes — to offer our products and services to you | Yes | No |
| For joint marketing with other financial companies | No | We don’t share |
| For our investment management affiliates’ everyday business purposes — information about your transactions, experiences, and creditworthiness | Yes | Yes |
| For our affiliates’ everyday business purposes — information about your transactions and experiences | Yes | No |
| For our affiliates’ everyday business purposes — information about your creditworthiness | No | We don’t share |
| For our investment management affiliates to market to you | Yes | Yes |
| For our affiliates to market to you | No | We don’t share |
| For nonaffiliates to market to you | No | We don’t share |
| To
limit our sharing |
Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.comPlease note:If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
| Questions? | Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.com |
39
Eaton Vance Funds
| Privacy Notice — continued | April 2021 |
Page 2
| Who we are | |
| Who is providing this notice? | Eaton Vance Management, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd., Eaton Vance Global Advisors Limited, Eaton Vance Management’s Real Estate Investment Group, Boston Management and Research, Calvert Research and Management, Eaton Vance and Calvert Fund Families and our investment advisory affiliates (“Eaton Vance”) (see Investment Management Affiliates definition below) |
| What we do | |
| How
does Eaton Vance protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information. |
| How
does Eaton Vance collect my personal information? |
We
collect your personal information, for example, when you■ open an account or make deposits or withdrawals from your account ■ buy securities from us or make a wire transfer ■ give us your contact informationWe also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
| Why can’t I limit all sharing? | Federal
law gives you the right to limit only■ sharing for affiliates’ everyday business purposes — information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to youState laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
| Definitions | |
| Investment
Management Affiliates |
Eaton Vance Investment Management Affiliates include registered investment advisers, registered broker- dealers, and registered and unregistered funds. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.■ Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.■ Eaton Vance does not share with nonaffiliates so they can market to you. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.■ Eaton Vance doesn’t jointly market. |
| Other important information | |
| Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Nonaffiliates unless you provide us with your written consent to share such information.California: Except as permitted by law, we will not share personal information we collect about California residents with Nonaffiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us. | |
40
Eaton Vance Funds
IMPORTANT NOTICES
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 intermediary, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-260-0761, or contact your financial intermediary. Your instructions that householding not apply
to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial intermediary.
Portfolio
Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) files a schedule of portfolio holdings on Part F to Form N-PORT with the
SEC. Certain information filed on Form N-PORT may be viewed on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-260-0761 or in the EDGAR database on the SEC’s website at www.sec.gov.
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 1-800-260-0761 and by accessing the SEC’s website at www.sec.gov.
41
* FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the
professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to
investors at www.FINRA.org.
Item 2. Code of Ethics
Not required in this filing.
Item 3. Audit Committee Financial Expert
Not required in this filing.
Item 4. Principal Accountant Fees and Services
Not required in this filing.
Item 5. Audit Committee of Listed Registrants
Not applicable.
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
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
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 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 13. 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 Municipals Trust II | ||
| By: | /s/ Eric A. Stein | |
| Eric A. Stein | ||
| President | ||
Date: September 16, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ James F. Kirchner | |
| James F. Kirchner | ||
| Treasurer |
Date: September 16, 2022
| By: | /s/ Eric A. Stein | |
| Eric A. Stein | ||
| President |
Date: September 16, 2022