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)
One Post Office Square, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Deidre E. Walsh
One Post Office Square, Boston, Massachusetts 02109
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number)
January 31
Date of Fiscal Year End
January 31, 2024
Date of Reporting Period
Item 1. Reports to Stockholders
Eaton Vance
High Yield Municipal Income Fund
Annual Report
January 31, 2024
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.
Annual Report January 31, 2024
Eaton Vance
High Yield Municipal Income Fund
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Management’s Discussion of Fund Performance†
Economic and Market Conditions
For municipal bond investors, the 12-month period ended January
31, 2024, may be described as a roller-coaster ride driven by changing expectations of how long the U.S. Federal Reserve (the Fed) might keep raising the federal funds rate to tame inflation, and how high rates might go.
As the period opened in February 2023, a months-long municipal
bond rally stalled as robust economic reports led investors to fear the Fed might keep rates higher for longer than previously expected.
In March 2023, however, municipal bond performance turned
positive following the failure of two regional U.S. banks that triggered a “flight to quality” that, in turn, lifted municipal bonds to their strongest March performance since 2008 -- despite the Fed raising rates for a ninth consecutive
time that month.
In April 2023, the municipal bond market
began another sell-off. Although positive technical factors -- particularly municipal bond demand that exceeded supply -- produced brief periods of positive performance, the Fed’s tenth and eleventh rate hikes in a little over a year -- in May
and July 2023 -- caused municipal yields to rise and bond prices to fall.
From August through October 2023, above-average supply -- plus
an end-of-summer slowdown in coupon reinvestment -- reduced demand for municipal bonds even more. Although the Fed left interest rates unchanged in September 2023, investors interpreted the message to be that rates might stay higher for longer than
expected just weeks earlier -- adding fuel to the municipal bond sell-off.
In November and December 2023, the municipal bond market
reversed course. After several consecutive months of negative returns and rising rates, federal tax-free municipal yields approached their 2022 highs, giving investors a compelling reason to buy municipal bonds.
Typical calendar year-end technical factors -- particularly
constrained supplies and increased demand -- were additional tailwinds for municipal bond prices. Falling inflation and easing employment gains also led many investors to believe the Fed was done raising rates. As a result, the Bloomberg Municipal
Bond Index (the Index) returned 6.35% in November 2023, its best monthly performance since 1982.
In December 2023, the Index posted another solid monthly gain
as investors began to conclude the Fed might actually begin lowering interest rates as early as March 2024. In the final month of the period, however, municipal returns turned negative as municipal bonds -- following a strong year-end rally --
appeared overvalued relative to U.S. Treasurys. Strong U.S. economic reports led investors to push expectations of a potential rate cut out to mid-2024, weighing on municipal returns during the period.
For the period as a whole, the Index returned 2.90%. Yields
rose and prices fell across the municipal bond yield curve. Municipal bonds outperformed U.S. Treasurys in the middle- and long-maturity areas of the curve, but underperformed Treasurys in the short-maturity portion of the yield curve. During the
period, lower-rated bonds generally outperformed higher-rated bonds, while longer-maturity bonds outperformed shorter-maturity bonds.
Fund Performance
For the 12-month period ended January 31, 2024, Eaton Vance
High Yield Municipal Income Fund (the Fund) returned 4.42% for Class A shares at net asset value (NAV), outperforming its benchmark, the Bloomberg Municipal Bond Index (the Index), which returned 2.90%.
The Fund invests primarily in high yield municipal obligations
-- securities rated BBB and below. The Index, which reflects the broad municipal market, had a significantly smaller weight in BBB-rated and below-investment-grade bonds than the Fund during the period.
For the period as a whole, the municipal high yield asset class
outperformed the municipal investment-grade asset class due to higher interest income and the generally longer duration of high yield bonds. Longer duration municipal bonds generally outperformed shorter duration municipal bonds during the
period.
Contributors to Fund performance versus the
Index during the period included security selections and an overweight position in bonds with 17 years or more remaining to maturity. Additional contributors included security selections and an overweight position in the industrial development
revenue sector, and the Fund’s hedging strategy, which used U.S. Treasury futures to help mitigate interest rate volatility.
As a risk-management tactic within the Fund’s overall
strategy, interest rate hedging is intended to moderate performance in both up and down markets. In a period when municipal bonds generally declined in price as yields moved higher, the Fund’s Treasury-futures hedging strategy contributed to
relative returns versus the unhedged Index.
In contrast,
detractors from Fund performance versus the Index included an underweight position in California bonds and the Fund’s use of leverage during the period.
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
January 31, 2024
Management’s
Discussion of Fund Performance† — continued
The Fund used leverage in the form of residual interest bond
financing to enhance its tax-exempt income potential. In general, the use of leverage has the effect of achieving additional exposure to the municipal bond market, thereby magnifying the Fund’s exposure to its underlying holdings in both up
and down market environments. In a period when interest rates rose and bond prices declined, the use of leverage -- including selection of bonds held in trust -- detracted from Index-relative returns.
3
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Performance
Portfolio Manager(s) Cynthia J.
Clemson and William J. Delahunty, CFA
| % Average Annual Total Returns1,2 | Class
Inception Date |
Performance
Inception Date |
One Year | Five Years | Ten Years |
| Class A at NAV | 08/07/1995 | 08/07/1995 | 4.42% | 2.13% | 4.04% |
| Class A with 3.25% Maximum Sales Charge | — | — | 1.07 | 1.45 | 3.70 |
| Class C at NAV | 06/18/1997 | 08/07/1995 | 3.65 | 1.38 | 3.44 |
| Class C with 1% Maximum Deferred Sales Charge | — | — | 2.65 | 1.38 | 3.44 |
| Class I at NAV | 05/09/2007 | 08/07/1995 | 4.68 | 2.39 | 4.32 |
| Class W at NAV | 10/01/2021 | 08/07/1995 | 5.30 | 2.60 | 4.42 |
|
| |||||
| Bloomberg Municipal Bond Index | — | — | 2.90% | 1.99% | 2.78% |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class W |
| Gross | 0.91% | 1.66% | 0.66% | 0.64% |
| Net | 0.91 | 1.66 | 0.66 | 0.21 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I | Class W |
| Distribution Rate | 4.08% | 3.33% | 4.33% | 4.80% |
| Taxable-Equivalent Distribution Rate | 6.89 | 5.62 | 7.31 | 8.11 |
| SEC 30-day Yield | 3.79 | 3.17 | 4.16 | 4.63 |
| Taxable-Equivalent SEC 30-day Yield | 6.40 | 5.35 | 7.03 | 7.82 |
| % Total Leverage5 | |
| Residual Interest Bond (RIB) Financing | 3.64% |
Growth of $10,000
This graph shows the change in value of a hypothetical
investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
| Growth of Investment2 | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge |
| Class C | $10,000 | 01/31/2014 | $14,025 | N.A. |
| Class I, at minimum investment | $1,000,000 | 01/31/2014 | $1,526,106 | N.A. |
| Class W | $10,000 | 01/31/2014 | $15,421 | N.A. |
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
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Fund Profile
| Credit Quality (% of total investments)1,2 |
Footnotes:
| 1 | 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. |
| 2 | The chart includes the municipal bonds held by a trust that issues residual interest bonds, consistent with the Portfolio of Investments. |
5
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases; 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 (August 1, 2023
to January 31, 2024).
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). 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 (8/1/23) |
Ending
Account Value (1/31/24) |
Expenses
Paid During Period* (8/1/23 – 1/31/24) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $1,040.70 | $5.09 | 0.99% |
| Class C | $1,000.00 | $1,037.00 | $8.88 | 1.73% |
| Class I | $1,000.00 | $1,042.00 | $3.81 | 0.74% |
| Class W | $1,000.00 | $1,044.50 | $1.44** | 0.28% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,020.22 | $5.04 | 0.99% |
| Class C | $1,000.00 | $1,016.48 | $8.79 | 1.73% |
| Class I | $1,000.00 | $1,021.48 | $3.77 | 0.74% |
| Class W | $1,000.00 | $1,023.79 | $1.43** | 0.28% |
| * | 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 184/365 (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 July 31, 2023. |
| ** | Absent a reimbursement of investment advisory fees by an affiliate(s), expenses would be higher. |
7
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments
8
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
9
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
10
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
11
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
12
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
13
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
14
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
15
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
16
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — 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 | 3/19/24 | $(19,657,422) | $ (621,021) |
| U.S. Long Treasury Bond | (112) | Short | 3/19/24 | (13,702,500) | (719,454) |
| $(1,340,475) | |||||
17
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Portfolio of
Investments — continued
| 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. |
| FHLMC | – Federal Home Loan Mortgage Corp. |
| FNMA | – Federal National Mortgage Association |
| GNMA | – Government National Mortgage Association |
| LOC | – Letter of Credit |
| NPFG | – National Public Finance Guarantee Corp. |
| PSF | – Permanent School Fund |
| SFMR | – Single Family Mortgage Revenue |
| SPA | – Standby Bond Purchase Agreement |
18
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Statement of Assets
and Liabilities
| January 31, 2024 | |
| Assets | |
| Unaffiliated investments, at value (identified cost $1,515,041,568) | $ 1,538,448,349 |
| Cash | 64,010 |
| Deposits for derivatives collateral — futures contracts | 1,223,975 |
| Interest receivable | 14,880,427 |
| Receivable for investments sold | 710,579 |
| Receivable for Fund shares sold | 6,692,597 |
| Receivable from affiliates | 40,592 |
| Trustees' deferred compensation plan | 162,120 |
| Total assets | $1,562,222,649 |
| Liabilities | |
| Payable for floating rate notes issued | $ 56,392,912 |
| Payable for when-issued securities | 8,566,390 |
| Payable for Fund shares redeemed | 5,306,936 |
| Payable for variation margin on open futures contracts | 245,547 |
| Distributions payable | 469,001 |
| Payable to affiliates: | |
| Investment adviser fee | 535,509 |
| Distribution and service fees | 96,820 |
| Trustees' deferred compensation plan | 162,120 |
| Interest expense and fees payable | 636,068 |
| Accrued expenses | 446,886 |
| Total liabilities | $ 72,858,189 |
| Net Assets | $1,489,364,460 |
| Sources of Net Assets | |
| Paid-in capital | $ 1,604,690,504 |
| Accumulated loss | (115,326,044) |
| Net Assets | $1,489,364,460 |
| Class A Shares | |
| Net Assets | $ 306,027,165 |
| Shares Outstanding | 37,507,634 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 8.16 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 8.43 |
| Class C Shares | |
| Net Assets | $ 38,802,089 |
| Shares Outstanding | 5,142,177 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 7.55 |
| Class I Shares | |
| Net Assets | $ 1,032,343,866 |
| Shares Outstanding | 126,389,887 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 8.17 |
19
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Statement of Assets
and Liabilities — continued
| January 31, 2024 | |
| Class W Shares | |
| Net Assets | $112,191,340 |
| Shares Outstanding | 13,738,704 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 8.17 |
| 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. |
20
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Statement of
Operations
| Year Ended | |
| January 31, 2024 | |
| Investment Income | |
| Interest income | $ 67,064,230 |
| Total investment income | $ 67,064,230 |
| Expenses | |
| Investment adviser fee | $ 5,586,348 |
| Distribution and service fees: | |
| Class A | 724,958 |
| Class C | 457,106 |
| Trustees’ fees and expenses | 86,071 |
| Custodian fee | 288,728 |
| Transfer and dividend disbursing agent fees | 427,262 |
| Legal and accounting services | 138,195 |
| Printing and postage | 56,098 |
| Registration fees | 153,264 |
| Interest expense and fees | 2,794,513 |
| Miscellaneous | 130,475 |
| Total expenses | $ 10,843,018 |
| Deduct: | |
| Reimbursement of investment adviser fee — Class W | $ 281,239 |
| Total expense reductions | $ 281,239 |
| Net expenses | $ 10,561,779 |
| Net investment income | $ 56,502,451 |
| Realized and Unrealized Gain (Loss) | |
| Net realized gain (loss): | |
| Investment transactions | $ (14,306,113) |
| Futures contracts | 2,648,365 |
| Net realized loss | $(11,657,748) |
| Change in unrealized appreciation (depreciation): | |
| Investments | $ 22,653,115 |
| Futures contracts | (879,738) |
| Net change in unrealized appreciation (depreciation) | $ 21,773,377 |
| Net realized and unrealized gain | $ 10,115,629 |
| Net increase in net assets from operations | $ 66,618,080 |
21
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Statements of Changes
in Net Assets
| Year Ended January 31, | ||
| 2024 | 2023 | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 56,502,451 | $ 45,120,546 |
| Net realized loss | (11,657,748) | (71,277,589) |
| Net change in unrealized appreciation (depreciation) | 21,773,377 | (80,654,338) |
| Net increase (decrease) in net assets from operations | $ 66,618,080 | $ (106,811,381) |
| Distributions to shareholders: | ||
| Class A | $ (12,184,078) | $ (12,459,627) |
| Class C | (1,576,579) | (1,876,321) |
| Class I | (38,638,312) | (33,694,504) |
| Class W | (3,124,495) | (764,048) |
| Total distributions to shareholders | $ (55,523,464) | $ (48,794,500) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (1,108,024) | $ (65,175,033) |
| Class C | (14,439,092) | (21,039,817) |
| Class I | 220,492,755 | (153,802,108) |
| Class W | 75,630,585 | 34,116,812 |
| Net increase (decrease) in net assets from Fund share transactions | $ 280,576,224 | $ (205,900,146) |
| Net increase (decrease) in net assets | $ 291,670,840 | $ (361,506,027) |
| Net Assets | ||
| At beginning of year | $ 1,197,693,620 | $ 1,559,199,647 |
| At end of year | $1,489,364,460 | $1,197,693,620 |
22
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Financial
Highlights
| Class A | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 8.15 | $ 9.08 | $ 9.36 | $ 9.38 | $ 8.83 |
| Income (Loss) From Operations | |||||
| Net investment income(1) | $ 0.34 | $ 0.29 | $ 0.28 | $ 0.31 | $ 0.33 |
| Net realized and unrealized gain (loss) | 0.00 (2) | (0.91) | (0.28) | (0.01) (3) | 0.59 |
| Total income (loss) from operations | $ 0.34 | $ (0.62) | $ 0.00(2) | $ 0.30 | $ 0.92 |
| Less Distributions | |||||
| From net investment income | $ (0.33) | $ (0.31) | $ (0.28) | $ (0.32) | $ (0.37) |
| Total distributions | $ (0.33) | $ (0.31) | $ (0.28) | $ (0.32) | $ (0.37) |
| Net asset value — End of year | $ 8.16 | $ 8.15 | $ 9.08 | $ 9.36 | $ 9.38 |
| Total Return(4) | 4.42% | (6.80)% | (0.02)% | 3.31% | 10.55% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $306,027 | $306,809 | $412,905 | $419,256 | $427,334 |
| Ratios (as a percentage of average daily net assets):(5) | |||||
| Expenses excluding interest and fees | 0.79% | 0.78% | 0.73% | 0.76% | 0.76% |
| Interest and fee expense(6) | 0.22% | 0.13% | 0.03% | 0.06% | 0.13% |
| Total expenses | 1.01% | 0.91% | 0.76% | 0.82% | 0.89% |
| Net expenses | 1.01% | 0.91% | 0.76% | 0.82% | 0.89% |
| Net investment income | 4.28% | 3.44% | 3.01% | 3.35% | 3.57% |
| Portfolio Turnover | 49% | 53% | 22% | 54% | 23% |
| (1) | Computed using average shares outstanding. |
| (2) | Amount is less than 0.005%. |
| (3) | 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. |
| (4) | 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. |
| (5) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (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
January 31, 2024
Financial
Highlights — continued
| Class C | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 7.54 | $ 8.40 | $ 8.66 | $ 8.68 | $ 8.17 |
| Income (Loss) From Operations | |||||
| Net investment income(1) | $ 0.26 | $ 0.21 | $ 0.20 | $ 0.22 | $ 0.24 |
| Net realized and unrealized gain (loss) | 0.00 (2) | (0.84) | (0.26) | (0.01) (3) | 0.55 |
| Total income (loss) from operations | $ 0.26 | $ (0.63) | $ (0.06) | $ 0.21 | $ 0.79 |
| Less Distributions | |||||
| From net investment income | $ (0.25) | $ (0.23) | $ (0.20) | $ (0.23) | $ (0.28) |
| Total distributions | $ (0.25) | $ (0.23) | $ (0.20) | $ (0.23) | $ (0.28) |
| Net asset value — End of year | $ 7.55 | $ 7.54 | $ 8.40 | $ 8.66 | $ 8.68 |
| Total Return(4) | 3.65% | (7.49)% | (0.78)% | 2.52% | 9.80% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $38,802 | $53,672 | $82,817 | $97,724 | $139,608 |
| Ratios (as a percentage of average daily net assets):(5) | |||||
| Expenses excluding interest and fees | 1.55% | 1.53% | 1.48% | 1.51% | 1.51% |
| Interest and fee expense(6) | 0.22% | 0.13% | 0.03% | 0.06% | 0.13% |
| Total expenses | 1.77% | 1.66% | 1.51% | 1.57% | 1.64% |
| Net expenses | 1.77% | 1.66% | 1.51% | 1.57% | 1.64% |
| Net investment income | 3.53% | 2.68% | 2.26% | 2.63% | 2.82% |
| Portfolio Turnover | 49% | 53% | 22% | 54% | 23% |
| (1) | Computed using average shares outstanding. |
| (2) | Amount is less than 0.005%. |
| (3) | 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. |
| (4) | 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. |
| (5) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (6) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H). |
24
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Financial
Highlights — continued
| Class I | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 8.16 | $ 9.09 | $ 9.37 | $ 9.39 | $ 8.84 |
| Income (Loss) From Operations | |||||
| Net investment income(1) | $ 0.36 | $ 0.31 | $ 0.31 | $ 0.33 | $ 0.35 |
| Net realized and unrealized gain (loss) | 0.00 (2) | (0.91) | (0.28) | (0.01) (3) | 0.59 |
| Total income (loss) from operations | $ 0.36 | $ (0.60) | $ 0.03 | $ 0.32 | $ 0.94 |
| Less Distributions | |||||
| From net investment income | $ (0.35) | $ (0.33) | $ (0.31) | $ (0.34) | $ (0.39) |
| Total distributions | $ (0.35) | $ (0.33) | $ (0.31) | $ (0.34) | $ (0.39) |
| Net asset value — End of year | $ 8.17 | $ 8.16 | $ 9.09 | $ 9.37 | $ 9.39 |
| Total Return(4) | 4.68% | (6.55)% | 0.24% | 3.57% | 10.81% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $1,032,344 | $802,994 | $1,063,175 | $994,877 | $878,062 |
| Ratios (as a percentage of average daily net assets):(5) | |||||
| Expenses excluding interest and fees | 0.54% | 0.53% | 0.48% | 0.51% | 0.51% |
| Interest and fee expense(6) | 0.22% | 0.13% | 0.03% | 0.06% | 0.13% |
| Total expenses | 0.76% | 0.66% | 0.51% | 0.57% | 0.64% |
| Net expenses | 0.76% | 0.66% | 0.51% | 0.57% | 0.64% |
| Net investment income | 4.52% | 3.69% | 3.25% | 3.59% | 3.81% |
| Portfolio Turnover | 49% | 53% | 22% | 54% | 23% |
| (1) | Computed using average shares outstanding. |
| (2) | Amount is less than 0.005%. |
| (3) | 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. |
| (4) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (5) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (6) | Interest and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1H). |
25
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Financial
Highlights — continued
| Class W | ||||
| Year Ended January 31, | Period
Ended January 31, 2022(1) |
|||
| 2024 | 2023 | |||
| Net asset value — Beginning of period | $ 8.15 | $ 9.09 | $ 9.32 | |
| Income (Loss) From Operations | ||||
| Net investment income(2) | $ 0.39 | $ 0.35 | $ 0.10 | |
| Net realized and unrealized gain (loss) | 0.02 | (0.92) | (0.22) | |
| Total income (loss) from operations | $ 0.41 | $ (0.57) | $(0.12) | |
| Less Distributions | ||||
| From net investment income | $ (0.39) | $ (0.37) | $ (0.11) | |
| Total distributions | $ (0.39) | $ (0.37) | $(0.11) | |
| Net asset value — End of period | $ 8.17 | $ 8.15 | $ 9.09 | |
| Total Return(3) | 5.30% | (6.23)% | (1.30)% (4) | |
| Ratios/Supplemental Data | ||||
| Net assets, end of period (000’s omitted) | $112,191 | $34,218 | $ 302 | |
| Ratios (as a percentage of average daily net assets):(5) | ||||
| Expenses excluding interest and fees | 0.51% | 0.51% | 0.43% (6) | |
| Interest and fee expense(7) | 0.22% | 0.13% | 0.03% (6) | |
| Total expenses | 0.73% | 0.64% | 0.46% (6) | |
| Net expenses | 0.29% | 0.21% | 0.09% (6) | |
| Net investment income | 4.98% | 4.30% | 3.34% (6) | |
| Portfolio Turnover | 49% | 53% | 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) | Not annualized. |
| (5) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (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. |
26
See Notes to Financial Statements.
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements
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's
investment objective is 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. Sub-accounting, record keeping and similar administrative fees payable to financial intermediaries, which are a component of transfer and dividend disbursing agent fees on the Statement of Operations, are not allocated to Class W
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. In
connection with Rule 2a-5 of the 1940 Act, the Trustees have designated the Fund’s investment adviser as its valuation designee. Investments for which valuations or market quotations are not readily available or are deemed unreliable are
valued by the investment adviser, as valuation designee, at fair value using methods that most fairly reflect 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 January 31, 2024, 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.
27
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements — 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 January 31, 2024. 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 January 31, 2024, the amount of the Fund’s Floating Rate Notes outstanding and the related collateral were $56,392,912 and $77,689,944, respectively. The range of interest rates on the
Floating Rate Notes outstanding at January 31, 2024 was 4.58% to 4.85%. For the year ended January 31, 2024, the Fund’s average settled Floating Rate Notes outstanding and the average interest rate including fees were $70,899,726 and
3.94%, 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 January 31, 2024.
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. Effective August 19, 2022, the Fund began operating under Rule 18f-4 under the 1940 Act, which, among other things,
governs the use of derivative investments and certain financing transactions by registered investment companies. As of the date of this report, consistent with Rule 18f-4, the Fund has elected to treat its investments in residual interest bonds,
along with similar financing transactions, as derivatives transactions subject to the Fund’s value-at-risk (VaR)-based limits on leverage risk. The Fund may change this election (and elect to treat these investments and other similar financing
transactions like bank borrowings subject to the asset coverage requirements of Section 18 of the 1940 Act) at any time. 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
28
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements — continued
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 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.
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.
The tax character of distributions declared for the years ended
January 31, 2024 and January 31, 2023 was as follows:
| Year Ended January 31, | ||
| 2024 | 2023 | |
| Tax-exempt income | $49,509,508 | $43,836,294 |
| Ordinary income | $ 6,013,956 | $ 4,958,206 |
As of January 31, 2024, the components of distributable
earnings (accumulated loss) on a tax basis were as follows:
| Undistributed tax-exempt income | $ 463,133 |
| Deferred capital losses | (135,193,784) |
| Net unrealized appreciation | 19,873,608 |
| Distributions payable | (469,001) |
| Accumulated loss | $(115,326,044) |
At January 31, 2024, the Fund, for
federal income tax purposes, had deferred capital losses of $135,193,784 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, 2024, $53,849,352 are short-term and $81,344,432 are long-term.
29
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements — continued
The
cost and unrealized appreciation (depreciation) of investments, including open derivative contracts, of the Fund at January 31, 2024, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $1,462,181,829 |
| Gross unrealized appreciation | $ 56,988,057 |
| Gross unrealized depreciation | (37,114,449) |
| Net unrealized appreciation | $ 19,873,608 |
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 year ended January 31, 2024,
the investment adviser fee amounted to $5,586,348 or 0.44% 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 $281,239 of the advisory fees paid by Class W shares for the year ended January 31, 2024.
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 year ended January 31, 2024, EVM earned $23,486 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 $17,829 as its portion of the sales charge on sales of Class A shares for the year ended January 31, 2024. 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 year ended January 31, 2024 in the amount of $13,274. 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. 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. 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 year ended January 31, 2024 amounted to $724,958 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 year ended January 31, 2024, the Fund paid or accrued to EVD $342,830 for Class C shares.
30
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements — continued
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 year ended January 31, 2024 amounted to $114,276 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% CDSC if redeemed within 12 months 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 year ended January 31, 2024, the Fund was informed that EVD received
$3,295 and $5,404 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 $902,222,761 and $654,893,587, respectively, for the year ended January 31, 2024.
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, including direct exchanges
pursuant to share class conversions, were as follows:
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | ||||
| Shares | Amount | Shares | Amount | ||
| Class A | |||||
| Sales | 8,721,888 | $ 69,056,224 | 9,663,643 | $ 78,723,700 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 1,300,577 | 10,278,255 | 1,241,755 | 10,173,924 | |
| Redemptions | (10,170,888) | (80,442,503) | (18,709,914) | (154,072,657) | |
| Net decrease | (148,423) | $ (1,108,024) | (7,804,516) | $ (65,175,033) | |
| Class C | |||||
| Sales | 508,565 | $ 3,726,336 | 1,347,862 | $ 10,104,252 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 186,152 | 1,360,273 | 219,870 | 1,668,643 | |
| Redemptions | (2,675,173) | (19,525,701) | (4,303,974) | (32,812,712) | |
| Net decrease | (1,980,456) | $ (14,439,092) | (2,736,242) | $ (21,039,817) | |
| Class I | |||||
| Sales | 80,230,560 | $ 631,556,574 | 75,749,215 | $ 617,557,467 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 4,339,767 | 34,341,669 | 3,550,923 | 29,150,730 | |
| Redemptions | (56,632,518) | (445,405,488) | (97,782,951) | (800,510,305) | |
| Net increase (decrease) | 27,937,809 | $ 220,492,755 | (18,482,813) | $(153,802,108) | |
31
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements — continued
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | ||||
| Shares | Amount | Shares | Amount | ||
| Class W | |||||
| Sales | 11,377,202 | $ 90,054,180 | 4,693,452 | $ 38,347,975 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 395,241 | 3,124,455 | 94,572 | 755,332 | |
| Redemptions | (2,229,881) | (17,548,050) | (625,053) | (4,986,495) | |
| Net increase | 9,542,562 | $ 75,630,585 | 4,162,971 | $ 34,116,812 | |
8 Line of Credit
The Fund participates with other portfolios and funds managed
by EVM and its affiliates in a $650 million unsecured revolving line of credit agreement with a group of banks, which is in effect through October 22, 2024. In connection with the renewal of the agreement on October 24, 2023, the borrowing limit was
decreased from $725 million. 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 2023, an arrangement fee of $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 had no borrowings outstanding pursuant to its line of credit at January 31, 2024. The Fund did not have any significant borrowings or allocated fees during the
year ended January 31, 2024.
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 January 31, 2024 is included in the Portfolio of
Investments. At January 31, 2024, 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 January 31, 2024 was as follows:
| Fair Value | ||
| Derivative | Asset Derivative | Liability Derivative(1) |
| Futures contracts | $ — | $(1,340,475) |
| (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. |
32
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Notes to Financial
Statements — 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 year ended January 31, 2024 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 | $2,648,365 | $(879,738) |
| (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 year ended January 31, 2024, which is indicative of the volume of this derivative type, was approximately $33,172,000.
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 January 31, 2024, the hierarchy of inputs used in valuing
the Fund's investments and open derivative instruments, which are carried at fair value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Corporate Bonds | $ — | $ 27,518,222 | $ — | $ 27,518,222 |
| Tax-Exempt Mortgage-Backed Securities | — | 6,616,007 | — | 6,616,007 |
| Tax-Exempt Municipal Obligations | — | 1,409,332,536 | — | 1,409,332,536 |
| Taxable Municipal Obligations | — | 94,981,584 | — | 94,981,584 |
| Total Investments | $ — | $ 1,538,448,349 | $ — | $ 1,538,448,349 |
| Liability Description | ||||
| Futures Contracts | $ (1,340,475) | $ — | $ — | $ (1,340,475) |
| Total | $ (1,340,475) | $ — | $ — | $ (1,340,475) |
33
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Report of Independent
Registered Public Accounting Firm
To the
Trustees of Eaton Vance Municipals Trust II and Shareholders of Eaton Vance High Yield Municipal Income Fund:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying statement of
assets and liabilities of Eaton Vance High Yield Municipal Income Fund (the “Fund”) (one of the funds constituting Eaton Vance Municipals Trust II), including the portfolio of investments, as of January 31, 2024, the related statement of
operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the
financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of January 31, 2024, and the results of its operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The
Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements and financial highlights. Our procedures included confirmation of securities owned as of January 31, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 20, 2024
Boston, Massachusetts
March 20, 2024
We have served as the auditor of one or
more Eaton Vance investment companies since 1959.
34
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Federal Tax
Information (Unaudited)
The
Form 1099-DIV you receive in February 2025 will show the tax status of all distributions paid to your account in calendar year 2024. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment
in the Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding the status of exempt-interest dividends.
Exempt-Interest Dividends. For
the fiscal year ended January 31, 2024, the Fund designates 89.17% of distributions from net investment income as an exempt-interest dividend.
35
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Management and
Organization
Fund
Management. The Trustees of Eaton Vance Municipals Trust II (the Trust) are responsible for the overall management and supervision of the Trust's affairs. The Board members and officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Board members hold indefinite terms of office. Each Trustee holds office until his or her successor is elected and
qualified, subject to a prior death, resignation, retirement, disqualification or removal. Under the terms of the Fund’s current Trustee retirement policy, an Independent Trustee must retire and resign as a Trustee on the earlier of: (i) the
first day of July following his or her 74th birthday; or (ii), with limited exception, December 31st of the 20th year in which he or she has served as a Trustee. However, if such retirement and resignation would cause the Fund to be out of
compliance with Section 16 of the 1940 Act or any other regulations or guidance of the SEC, then such retirement and resignation will not become effective until such time as action has been taken for the Fund to be in compliance therewith. The
“noninterested Trustees” consist of those Trustees who are not “interested persons” of the Trust, as that term is defined under the 1940 Act. The business address of each Board member and officer is One Post Office Square,
Boston, Massachusetts 02109. As used below, “BMR” refers to Boston Management and Research, “EV” refers to EV LLC, “EVM” refers to Eaton Vance Management, “MSIM” refers to Morgan Stanley Investment
Management Inc. and “EVD” refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. Each of EVM, BMR, EVD and EV are indirect, wholly owned subsidiaries of Morgan Stanley. Each officer affiliated with EVM may
hold a position with other EVM affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 127 funds in the Eaton Vance fund complex (including both funds and portfolios in a hub and spoke
structure).
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Interested Trustee | |||
| Anchal
Pachnanda(1) 1980 |
Trustee | Since 2023 | Co-Head of
Strategy of MSIM (since 2019). Formerly, Head of Strategy of MSIM (2017-2019). Ms. Pachnanda is an interested person because of her position with MSIM, which is an affiliate of the Trust. Other Directorships. None. |
| Noninterested Trustees | |||
| Alan
C. Bowser 1962 |
Trustee | Since 2022 | Private investor.
Formerly, Chief Diversity Officer, Partner and a member of the Operating Committee, and formerly served as Senior Advisor on Diversity and Inclusion for the firm’s chief executive officer, Co-Head of the Americas Region, and Senior Client
Advisor of Bridgewater Associates, an asset management firm (2011- 2023). Other Directorships. Independent Director of Stout Risius Ross (a middle market professional services advisory firm) (since 2021). |
| Mark
R. Fetting 1954 |
Trustee | Since 2016 | Private investor.
Formerly held various positions at Legg Mason, Inc. (investment management firm) (2000-2012), including President, Chief Executive Officer, Director and Chairman (2008-2012), Senior Executive Vice President (2004-2008) and Executive Vice President
(2001-2004). Formerly, President of Legg Mason family of funds (2001-2008). Formerly, Division President and Senior Officer of Prudential Financial Group, Inc. and related companies (investment management firm) (1991-2000). Other Directorships. None. |
| Cynthia
E. Frost 1961 |
Trustee | Since 2014 | Private investor.
Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012). Formerly, Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000). Formerly, Managing Director, Cambridge Associates
(investment consulting company) (1989-1995). Formerly, Consultant, Bain and Company (management consulting firm) (1987-1989). Formerly, Senior Equity Analyst, BA Investment Management Company (1983-1985). Other Directorships. None. |
| George
J. Gorman 1952 |
Chairperson
of the Board and Trustee |
Since
2021 (Chairperson) and 2014 (Trustee) |
Principal
at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (a registered public accounting firm) (1974-2009). Other Directorships. None. |
36
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Noninterested Trustees (continued) | |||
| Valerie
A. Mosley 1960 |
Trustee | Since 2014 | Chairwoman
and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Founder of Upward Wealth, Inc., dba BrightUp, a fintech platform. Formerly, Partner and Senior Vice President, Portfolio Manager and Investment Strategist at
Wellington Management Company, LLP (investment management firm) (1992-2012). Formerly, Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990). Other Directorships. Director of DraftKings, Inc. (digital sports entertainment and gaming company) (since September 2020). Director of Envestnet, Inc. (provider of intelligent systems for wealth management and financial wellness) (since 2018). Formerly, Director of Dynex Capital, Inc. (mortgage REIT) (2013-2020) and Director of Groupon, Inc. (e-commerce provider) (2020-2022). |
| Keith
Quinton 1958 |
Trustee | Since 2018 | Private investor,
researcher and lecturer. Formerly, Independent Investment Committee Member at New Hampshire Retirement System (2017-2021). Formerly, Portfolio Manager and Senior Quantitative Analyst at Fidelity Investments (investment management firm)
(2001-2014). Other Directorships. Formerly, Director (2016-2021) and Chairman (2019-2021) of New Hampshire Municipal Bond Bank. |
| Marcus
L. Smith 1966 |
Trustee | Since 2018 | Private investor
and independent corporate director. Formerly, Chief Investment Officer, Canada (2012-2017), Chief Investment Officer, Asia (2010-2012), Director of Asian Research (2004-2010) and portfolio manager (2001-2017) at MFS Investment Management
(investment management firm). Other Directorships. Director of First Industrial Realty Trust, Inc. (an industrial REIT) (since 2021). Director of MSCI Inc. (global provider of investment decision support tools) (since 2017). Formerly, Director of DCT Industrial Trust Inc. (logistics real estate company) (2017-2018). |
| Susan
J. Sutherland 1957 |
Trustee | Since 2015 | Private investor.
Director of Ascot Group Limited and certain of its subsidiaries (insurance and reinsurance) (since 2017). Formerly, Director of Hagerty Holding Corp. (insurance) (2015-2018) and Montpelier Re Holdings Ltd. (insurance and reinsurance) (2013-2015).
Formerly, Associate, Counsel and Partner at Skadden, Arps, Slate, Meagher & Flom LLP (law firm) (1982-2013). Other Directorships. Formerly, Director of Kairos Acquisition Corp. (insurance/InsurTech acquisition company) (2021-2023). |
| Scott
E. Wennerholm 1959 |
Trustee | Since 2016 | Private investor.
Formerly, Trustee at Wheelock College (postsecondary institution) (2012-2018). Formerly, Consultant at GF Parish Group (executive recruiting firm) (2016-2017). Formerly, Chief Operating Officer and Executive Vice President at BNY Mellon Asset
Management (investment management firm) (2005-2011). Formerly, Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm) (1997-2004). Formerly, Vice President at Fidelity Investments
Institutional Services (investment management firm) (1994-1997). Other Directorships. None. |
| Nancy
A. Wiser 1967 |
Trustee | Since 2022 | Formerly,
Executive Vice President and the Global Head of Operations at Wells Fargo Asset Management (2011-2021). Other Directorships. None. |
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees | |||
| Kenneth
A. Topping 1966 |
President | Since 2023 | Vice President and Chief Administrative Officer of EVM and BMR and Chief Operating Officer for Public Markets at MSIM. Also Vice President of Calvert Research and Management (“CRM”) since 2021. Formerly, Chief Operating Officer for Goldman Sachs Asset Management `Classic' (2009-2020). |
| Deidre
E. Walsh 1971 |
Vice
President and Chief Legal Officer |
Since 2009 | Vice President of EVM and BMR. Also Vice President of CRM. |
| James
F. Kirchner 1967 |
Treasurer | Since 2007 | Vice President of EVM and BMR. Also Vice President of CRM. |
37
Eaton Vance
High Yield Municipal Income Fund
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees (continued) | |||
| Nicholas
S. Di Lorenzo 1987 |
Secretary | Since 2022 | Formerly, associate (2012-2021) and counsel (2022) at Dechert LLP. |
| Laura
T. Donovan 1976 |
Chief
Compliance Officer |
Since 2024 | Vice President of EVM and BMR. |
(1) Ms. Pachnanda began serving as Trustee effective April 1, 2023.
The SAI for the Fund includes additional information about the
Trustees and officers of the Fund and can be obtained without charge on Eaton Vance’s website at www.eatonvance.com or by calling 1-800-262-1122.
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 1-800-262-1122, 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.
Tailored Shareholder Reports. Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging
streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of
charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Eaton
Vance Funds.
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.
Parametric
TABS Municipal Bond Funds
Annual Report
January 31, 2024
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.
Annual Report January 31, 2024
Parametric
TABS Municipal Bond Funds
Parametric
TABS Municipal Bond Funds
January 31, 2024
Management’s Discussion of Fund Performance†
Economic and Market Conditions
For municipal bond investors, the 12-month period ended
January 31, 2024, may be described as a roller-coaster ride driven by changing expectations of how long the U.S. Federal Reserve (the Fed) might keep raising the federal funds rate to tame inflation, and how high rates might go.
As the period opened in February 2023, a months-long
municipal bond rally stalled as robust economic reports led investors to fear the Fed might keep rates higher for longer than previously expected.
In March 2023, however, municipal bond performance turned
positive following the failure of two regional U.S. banks that triggered a “flight to quality” that, in turn, lifted municipal bonds to their strongest March performance since 2008 -- despite the Fed raising rates for a ninth consecutive
time that month.
In April 2023, the municipal bond
market began another sell-off. Although positive technical factors -- particularly municipal bond demand that exceeded supply -- produced brief periods of positive performance, the Fed’s tenth and eleventh rate hikes in a little over a year --
in May and July 2023 -- caused municipal yields to rise and bond prices to fall.
From August through October 2023, above-average supply --
plus an end-of-summer slowdown in coupon reinvestment -- reduced demand for municipal bonds even more. Although the Fed left interest rates unchanged in September 2023, investors interpreted the message to be that rates might stay higher for longer
than expected just weeks earlier -- adding fuel to the municipal bond sell-off.
In November and December 2023, the municipal bond market
reversed course. After several consecutive months of negative returns and rising rates, federal tax-free municipal yields approached their 2022 highs, giving investors a compelling reason to buy municipal bonds.
Typical calendar year-end technical factors -- particularly
constrained supplies and increased demand -- were additional tailwinds for municipal bond prices. Falling inflation and easing employment gains also led many investors to believe the Fed was done raising rates. As a result, the Bloomberg Municipal
Bond Index (the Municipal Index) returned 6.35% in November 2023, its best monthly performance since 1982.
In December 2023, the Municipal Index posted another
solid monthly gain as investors began to conclude the Fed might actually begin lowering interest rates as early as March 2024. In the final month of the period, however, municipal returns turned negative as municipal bonds -- following a strong
year-end rally -- appeared overvalued relative to U.S. Treasurys. Strong U.S. economic reports led investors to push expectations of a potential rate cut out to mid-2024, weighing on municipal returns during the period.
For the period as a whole, the Municipal Index returned
2.90%. Yields rose and prices fell across the municipal bond yield curve. Municipal bonds outperformed U.S. Treasurys in the middle- and long-maturity areas of the curve, but underperformed Treasurys in the short-maturity portion of the yield curve.
During the period, lower-rated bonds generally outperformed higher-rated bonds, while longer-maturity bonds outperformed shorter-maturity bonds.
Fund Performance
For the 12-month period ended January 31, 2024, Parametric
TABS Short-Term Municipal Bond Fund (the Short-Term Fund) returned 2.14% for Class A shares at net asset value (NAV), outperforming its benchmark, the Bloomberg Municipal Managed Money 1-7 Year Bond Index (the 1-7 Year Index), which returned
1.51%.
For the 12-month period ended January 31, 2024,
Parametric TABS Intermediate-Term Municipal Bond Fund (the Intermediate-Term Fund) returned 3.13% for Class A shares at NAV, outperforming its benchmark, the Bloomberg Municipal Managed Money Intermediate 1-17 Year Bond Index (the 1-17 Year Index),
which returned 2.16%.
The 1-7 Year Index and the 1-17
Year Index are unmanaged, and returns do not reflect applicable sales charges, commissions, or expenses.
The Short-Term Fund and Intermediate-Term Fund (the Funds)
seek after-tax total returns by generally investing in investment-grade municipal securities of short- and intermediate-term durations. The Funds pursue after-tax total returns through relative-value trading -- a strategy that seeks to take
advantage of price and rate differences among similar securities. The sub-adviser’s process for selecting municipal obligations for purchase and sale includes consideration of the creditworthiness of the issuer or persons obligated to repay
the obligation.
In addition, the Funds may allocate up
to 20% of their net assets to municipal obligations not exempt from regular federal income taxes, direct obligations of the U.S. Treasury, and obligations of U.S. government agencies, instrumentalities, and government-sponsored enterprises. This
strategy helps pursue additional value by crossing over from tax-exempt municipal bonds to certain taxable bonds, and vice versa (the crossover-trading strategy), according to which sector the sub-adviser believes may be more attractively valued on
an after-tax basis.
During the period, relative-value
trading and active security selections were significant contributors to the performance of the Funds versus their respective indexes. In particular, increased rate volatility during most of the period allowed the Funds to profit from wide bid-offer
spreads within the municipal bond market -- by selling bonds at higher offer prices and buying bonds at lower bid prices.
In addition, as retail demand increased during the second
half of the period, the ability of the Funds to systematically sell holdings in large volumes at marked-up prices contributed to returns relative to their respective indexes.
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 Municipal Bond Funds
January 31, 2024
Management’s
Discussion of Fund Performance† — continued
Allocations by credit quality contributed to the Funds’
performance versus their respective indexes as well. Both Funds held overweight positions in A-rated securities, which helped relative performance as lower-rated bonds generally outperformed higher-rated AAA and AA bonds during the period.
Fund-Specific Results
For the Short-Term Fund, the crossover-trading strategy,
duration, and yield-curve positioning -- in addition to relative-value trading, active security selections, and credit-quality allocations -- contributed to performance versus the 1-7 Year Index during the period.
In February and March 2023, the Short-Term Fund used the
crossover-trading strategy to move about 15% of assets from tax-exempt municipal bonds to taxable U.S. Treasurys. This reallocation helped Index-relative performance as municipal bond yields rose during the period -- peaking in October 2023 -- and
U.S. Treasurys outperformed municipal bonds.
In late
October, the crossover-trading strategy was reduced to about 6% of assets, helping relative performance as municipal bonds rallied and outperformed U.S. Treasurys in November and December 2023. However, the Short-Term Fund’s remaining U.S.
Treasury assets detracted from relative returns during that time frame. For the period as a whole, the crossover-trading strategy was a net contributor to 1-7 Year Index-relative returns.
The Short-Term Fund increased its duration relative to the
1-7 Year Index in June 2023. While this reallocation proved to be somewhat premature and detracted from 1-7 Year Index-relative returns as municipal interest rates continued to rise through October 2023, the longer duration positioning helped the
Short-Term Fund’s relative performance when municipal bonds rallied in November and December 2023. For the period as a whole, duration positioning was a net contributor to performance versus the 1-7 Year Index.
Yield-curve positioning also helped the Short-Term
Fund’s performance relative to the 1-7 Year Index. During a period when municipal bonds with 6-15 years remaining to maturity outperformed other areas of the curve, the Short-Term Fund held positions in 7-12 year municipal bonds -- an area of
the yield curve where the 1-7 Year Index had no exposure.
For the Intermediate-Term Fund, the crossover-trading
strategy, duration, and yield-curve positioning -- in addition to relative-value trading, active security selections, and credit-quality allocations -- contributed to performance versus the 1-17 Year Index during the period.
In February 2023, the Intermediate-Term Fund used the
crossover-trading strategy to move a significant amount of assets from tax-exempt municipal bonds to taxable U.S. Treasurys. This reallocation helped 1-17 Year Index-relative performance as municipal bond yields rose and U.S. Treasurys outperformed
municipal bonds.
From August through October 2023, the
Intermediate-Term Fund’s crossover-trading strategy was gradually reduced to about 4% of its assets. This reduction helped relative performance as municipal bonds rallied and outperformed U.S. Treasurys in November and December 2023. However,
the Intermediate-Term Fund’s remaining U.S. Treasury assets detracted from 1-17 Year Index-relative returns during that time frame. For the period as a whole, the crossover-trading strategy was a net contributor to 1-17 Year Index-relative
returns.
Meanwhile, duration management was the largest
single contributor to the Intermediate-Term Fund’s performance versus the 1-17 Year Index. While the Intermediate-Term Fund maintained a longer duration than the 1-17 Year Index throughout the period, it further increased its duration in late
July 2023, and maintained that higher duration through the end of the calendar year. Although this increase detracted from 1-17 Year Index-relative returns as municipal interest rates continued to rise through October 2023, the longer duration
positioning helped the Fund’s relative performance when municipal bonds rallied in November and December 2023.
Yield-curve positioning also helped Fund performance versus
the 1-17 Year Index. During a period when longer-maturity municipal bonds generally outperformed shorter-maturity bonds, the Intermediate-Term Fund held positions in municipal bonds with maturities longer than 17 years -- an area of the yield curve
where the 1-17 Year Index had no exposure. This positioning was particularly beneficial to 1-17 Year Index-relative returns during the November-December 2023 municipal bond rally.
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.
3
Parametric
TABS Short-Term Municipal Bond Fund
January 31, 2024
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 |
One Year | Five Years | Ten Years |
| Class A at NAV | 03/27/2009 | 12/31/1998 | 2.14% | 1.48% | 1.31% |
| Class A with 3.25% Maximum Sales Charge | — | — | (1.17) | 0.81 | 0.97 |
| Class C at NAV | 03/27/2009 | 12/31/1998 | 1.27 | 0.73 | 0.70 |
| Class C with 1% Maximum Deferred Sales Charge | — | — | 0.28 | 0.73 | 0.70 |
| Class I at NAV | 03/27/2009 | 12/31/1998 | 2.29 | 1.73 | 1.55 |
|
| |||||
| Bloomberg Municipal Managed Money 1–7 Year Bond Index | — | — | 1.51% | 1.22% | 1.40% |
| Bloomberg 5 Year Municipal Bond Index | — | — | 1.92 | 1.50 | 1.73 |
| % 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 | (1.41)% | 0.59% | 0.80% |
| Class A After Taxes on Distributions and Sale of Fund Shares | — | — | 0.14 | 0.85 | 0.98 |
| Class C After Taxes on Distributions | 03/27/2009 | 12/31/1998 | 0.10 | 0.53 | 0.55 |
| Class C After Taxes on Distributions and Sale of Fund Shares | — | — | 0.78 | 0.65 | 0.66 |
| Class I After Taxes on Distributions | 03/27/2009 | 12/31/1998 | 2.02 | 1.50 | 1.38 |
| Class I After Taxes on Distributions and Sale of Fund Shares | — | — | 2.29 | 1.62 | 1.49 |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| 0.71% | 1.46% | 0.46% |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 2.69% | 1.94% | 2.95% |
| SEC 30-day Yield | 2.51 | 1.85 | 2.84 |
Growth of $10,000
This graph shows the change in value of a hypothetical
investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
| Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge |
| Class C | $10,000 | 01/31/2014 | $10,724 | N.A. |
| Class I, at minimum investment | $1,000,000 | 01/31/2014 | $1,166,404 | N.A. |
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 Short-Term Municipal Bond Fund
January 31, 2024
Fund Profile
| Credit Quality (% of total investments)1 |
Footnotes:
| 1 | 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 Intermediate-Term Municipal Bond Fund
January 31, 2024
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 |
One Year | Five Years | Ten Years |
| Class A at NAV | 02/01/2010 | 02/01/2010 | 3.13% | 2.02% | 2.40% |
| Class A with 3.25% Maximum Sales Charge | — | — | (0.25) | 1.35 | 2.07 |
| Class C at NAV | 02/01/2010 | 02/01/2010 | 2.44 | 1.25 | 1.78 |
| Class C with 1% Maximum Deferred Sales Charge | — | — | 1.44 | 1.25 | 1.78 |
| Class I at NAV | 02/01/2010 | 02/01/2010 | 3.39 | 2.27 | 2.66 |
|
| |||||
| Bloomberg Municipal Managed Money Intermediate 1–17 Year Bond Index | — | — | 2.16% | 1.86% | 2.44% |
| Bloomberg 7 Year Municipal Bond Index | — | — | 2.11 | 1.83 | 2.34 |
| % 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 | (0.48)% | 1.20% | 1.99% |
| Class A After Taxes on Distributions and Sale of Fund Shares | — | — | 0.83 | 1.40 | 1.98 |
| Class C After Taxes on Distributions | 02/01/2010 | 02/01/2010 | 1.26 | 1.13 | 1.71 |
| Class C After Taxes on Distributions and Sale of Fund Shares | — | — | 1.62 | 1.18 | 1.63 |
| Class I After Taxes on Distributions | 02/01/2010 | 02/01/2010 | 3.13 | 2.12 | 2.58 |
| Class I After Taxes on Distributions and Sale of Fund Shares | — | — | 3.10 | 2.17 | 2.50 |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 0.99% | 1.74% | 0.74% |
| Net | 0.85 | 1.60 | 0.60 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 2.96% | 2.20% | 3.22% |
| SEC 30-day Yield – Subsidized | 2.67 | 2.00 | 3.01 |
| SEC 30-day Yield – Unsubsidized | 2.50 | 1.84 | 2.84 |
Growth of $10,000
This graph shows the change in value of a hypothetical
investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
| Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge |
| Class C | $10,000 | 01/31/2014 | $11,936 | N.A. |
| Class I, at minimum investment | $1,000,000 | 01/31/2014 | $1,300,351 | N.A. |
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.
6
Parametric
TABS Intermediate-Term Municipal Bond Fund
January 31, 2024
Fund Profile
| Credit Quality (% of total investments)1 |
Footnotes:
| 1 | 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. |
7
Parametric
TABS Municipal Bond Funds
January 31, 2024
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases; 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 (August 1, 2023
to January 31, 2024).
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). 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 (8/1/23) |
Ending
Account Value (1/31/24) |
Expenses
Paid During Period* (8/1/23 – 1/31/24) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $1,024.30 | $3.83 | 0.75% |
| Class C | $1,000.00 | $1,019.40 | $7.69 | 1.51% |
| Class I | $1,000.00 | $1,024.50 | $2.55 | 0.50% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,021.43 | $3.82 | 0.75% |
| Class C | $1,000.00 | $1,017.59 | $7.68 | 1.51% |
| Class I | $1,000.00 | $1,022.69 | $2.55 | 0.50% |
| * | 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 184/365 (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 July 31, 2023. |
9
Parametric
TABS Municipal Bond Funds
January 31, 2024
Fund
Expenses — continued
Parametric TABS Intermediate-Term Municipal Bond Fund
| Beginning
Account Value (8/1/23) |
Ending
Account Value (1/31/24) |
Expenses
Paid During Period* (8/1/23 – 1/31/24) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $1,029.50 | $4.30** | 0.84% |
| Class C | $1,000.00 | $1,025.60 | $8.12** | 1.59% |
| Class I | $1,000.00 | $1,029.90 | $3.02** | 0.59% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,020.97 | $4.28** | 0.84% |
| Class C | $1,000.00 | $1,017.19 | $8.08** | 1.59% |
| Class I | $1,000.00 | $1,022.23 | $3.01** | 0.59% |
| * | 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 184/365 (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 July 31, 2023. |
| ** | Absent an allocation of certain expenses to affiliate(s), expenses would be higher. |
10
Parametric
TABS Short-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments
11
See Notes to Financial Statements.
Parametric
TABS Short-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
12
See Notes to Financial Statements.
Parametric
TABS Short-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
13
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments
14
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
15
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
16
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
17
See Notes to Financial Statements.
Parametric
TABS Intermediate-Term Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
| 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 |
| LOC | – Letter of Credit |
| 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 |
18
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Statements of Assets
and Liabilities
| January 31, 2024 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Assets | ||
| Unaffiliated investments, at value (identified cost $166,637,620 and $435,091,431, respectively) | $ 169,947,544 | $ 454,051,618 |
| Affiliated investments, at value (identified cost $2,520,558 and $9,129,656, respectively) | 2,520,558 | 9,129,656 |
| Cash | 6,138,334 | — |
| Interest receivable | 1,670,483 | 4,064,311 |
| Dividends receivable from affiliated investments | 9,242 | 77,155 |
| Receivable for investments sold | 1,001,500 | 26,398,472 |
| Receivable for Fund shares sold | 46,696 | 936,400 |
| Receivable from affiliates | — | 67,045 |
| Trustees' deferred compensation plan | 71,109 | 41,140 |
| Total assets | $181,405,466 | $494,765,797 |
| Liabilities | ||
| Payable for investments purchased | $ 1,499,667 | $ 25,890,085 |
| Payable for when-issued securities | — | 1,094,210 |
| Payable for Fund shares redeemed | 2,717,625 | 532,828 |
| Distributions payable | 120,948 | 490,114 |
| Payable to affiliates: | ||
| Investment adviser and administration fee | 53,048 | 192,071 |
| Distribution and service fees | 14,896 | 13,768 |
| Trustees' deferred compensation plan | 71,109 | 41,140 |
| Other | 793 | — |
| Accrued expenses | 142,086 | 567,902 |
| Total liabilities | $ 4,620,172 | $ 28,822,118 |
| Net Assets | $176,785,294 | $465,943,679 |
| Sources of Net Assets | ||
| Paid-in capital | $ 187,880,287 | $ 482,539,057 |
| Accumulated loss | (11,094,993) | (16,595,378) |
| Net Assets | $176,785,294 | $465,943,679 |
| Class A Shares | ||
| Net Assets | $ 61,740,555 | $ 46,655,430 |
| Shares Outstanding | 6,106,334 | 3,857,612 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.11 | $ 12.09 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 10.45 | $ 12.50 |
| Class C Shares | ||
| Net Assets | $ 2,098,250 | $ 4,436,615 |
| Shares Outstanding | 208,264 | 367,005 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 10.07 | $ 12.09 |
| Class I Shares | ||
| Net Assets | $ 112,946,489 | $ 414,851,634 |
| Shares Outstanding | 11,166,431 | 34,267,024 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.11 | $ 12.11 |
| 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
January 31, 2024
Statements of
Operations
| Year Ended January 31, 2024 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Investment Income | ||
| Dividend income from affiliated investments | $ 302,545 | $ 1,508,019 |
| Interest income | 7,107,381 | 18,992,466 |
| Total investment income | $ 7,409,926 | $20,500,485 |
| Expenses | ||
| Investment adviser and administration fee | $ 721,746 | $ 2,543,589 |
| Distribution and service fees: | ||
| Class A | 174,076 | 124,558 |
| Class C | 26,505 | 45,383 |
| Trustees’ fees and expenses | 13,039 | 33,708 |
| Custodian fee | 52,399 | 123,115 |
| Transfer and dividend disbursing agent fees | 76,997 | 814,458 |
| Legal and accounting services | 72,110 | 67,961 |
| Printing and postage | 9,119 | 60,448 |
| Registration fees | 52,499 | 142,289 |
| Miscellaneous | 33,559 | 34,455 |
| Total expenses | $ 1,232,049 | $ 3,989,964 |
| Deduct: | ||
| Waiver and/or reimbursement of expenses by affiliates | $ 9,653 | $ 814,498 |
| Total expense reductions | $ 9,653 | $ 814,498 |
| Net expenses | $ 1,222,396 | $ 3,175,466 |
| Net investment income | $ 6,187,530 | $17,325,019 |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss): | ||
| Investment transactions | $ (2,831,381) | $ (4,800,009) |
| Net realized loss | $(2,831,381) | $ (4,800,009) |
| Change in unrealized appreciation (depreciation): | ||
| Investments | $ 130,204 | $ 3,231,302 |
| Net change in unrealized appreciation (depreciation) | $ 130,204 | $ 3,231,302 |
| Net realized and unrealized loss | $(2,701,177) | $ (1,568,707) |
| Net increase in net assets from operations | $ 3,486,353 | $15,756,312 |
20
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Statements of Changes
in Net Assets
| Year Ended January 31, 2024 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 6,187,530 | $ 17,325,019 |
| Net realized loss | (2,831,381) | (4,800,009) |
| Net change in unrealized appreciation (depreciation) | 130,204 | 3,231,302 |
| Net increase in net assets from operations | $ 3,486,353 | $ 15,756,312 |
| Distributions to shareholders: | ||
| Class A | $ (1,881,418) | $ (1,536,273) |
| Class C | (51,600) | (105,464) |
| Class I | (3,950,376) | (15,091,430) |
| Total distributions to shareholders | $ (5,883,394) | $ (16,733,167) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (15,301,276) | $ (5,503,095) |
| Class C | (1,115,148) | (853,318) |
| Class I | (34,282,953) | (90,732,471) |
| Net decrease in net assets from Fund share transactions | $ (50,699,377) | $ (97,088,884) |
| Net decrease in net assets | $ (53,096,418) | $ (98,065,739) |
| Net Assets | ||
| At beginning of year | $ 229,881,712 | $ 564,009,418 |
| At end of year | $176,785,294 | $465,943,679 |
21
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Statements of Changes
in Net Assets — continued
| Year Ended January 31, 2023 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 4,354,224 | $ 12,690,725 |
| Net realized loss | (12,092,834) | (31,699,317) |
| Net change in unrealized appreciation (depreciation) | 2,229,091 | 5,962,189 |
| Net decrease in net assets from operations | $ (5,509,519) | $ (13,046,403) |
| Distributions to shareholders: | ||
| Class A | $ (1,400,824) | $ (1,019,132) |
| Class C | (17,417) | (72,096) |
| Class I | (2,874,290) | (11,534,650) |
| Total distributions to shareholders | $ (4,292,531) | $ (12,625,878) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (37,949,638) | $ (6,838,481) |
| Class C | (1,221,022) | (2,732,414) |
| Class I | (52,955,647) | (89,833,067) |
| Net decrease in net assets from Fund share transactions | $ (92,126,307) | $ (99,403,962) |
| Net decrease in net assets | $(101,928,357) | $(125,076,243) |
| Net Assets | ||
| At beginning of year | $ 331,810,069 | $ 689,085,661 |
| At end of year | $ 229,881,712 | $ 564,009,418 |
22
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Financial
Highlights
| Short-Term
Municipal Bond Fund — Class A | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 10.17 | $ 10.45 | $ 10.83 | $ 10.66 | $ 10.35 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.28 | $ 0.17 | $ 0.06 | $ 0.08(1) | $ 0.16(1) |
| Net realized and unrealized gain (loss) | (0.07) | (0.30) | (0.32) | 0.40 | 0.31 |
| Total income (loss) from operations | $ 0.21 | $ (0.13) | $ (0.26) | $ 0.48 | $ 0.47 |
| Less Distributions | |||||
| From net investment income | $ (0.27) | $ (0.15) | $ (0.05) | $ (0.08) | $ (0.16) |
| From net realized gain | — | — | (0.07) | (0.23) | — |
| Total distributions | $ (0.27) | $ (0.15) | $ (0.12) | $ (0.31) | $ (0.16) |
| Net asset value — End of year | $ 10.11 | $ 10.17 | $ 10.45 | $ 10.83 | $ 10.66 |
| Total Return(2) | 2.14% | (1.20)% | (2.39)% | 4.51% | 4.56% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $61,741 | $77,727 | $119,419 | $135,622 | $109,210 |
| Ratios (as a percentage of average daily net assets): | |||||
| Total expenses | 0.75% | 0.76% | 0.80% | 0.82% | 0.88% |
| Net expenses | 0.75% (3) | 0.76% (3) | 0.80% | 0.82% | 0.88% |
| Net investment income | 2.85% | 1.45% | 0.59% | 0.71% | 1.52% |
| Portfolio Turnover | 92% | 109% | 96% | 176% | 51% |
| (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) | 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 0.01% of average daily net assets for the years ended January 31, 2024 and 2023.) |
23
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Financial
Highlights — continued
| Short-Term
Municipal Bond Fund — Class C | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 10.14 | $ 10.39 | $ 10.79 | $ 10.64 | $ 10.32 |
| Income (Loss) From Operations | |||||
| Net investment income (loss)(1) | $ 0.21 | $ 0.07 | $ (0.02) | $ 0.01 | $ 0.08 |
| Net realized and unrealized gain (loss) | (0.09) | (0.27) | (0.31) | 0.38 | 0.32 |
| Total income (loss) from operations | $ 0.12 | $ (0.20) | $ (0.33) | $ 0.39 | $ 0.40 |
| Less Distributions | |||||
| From net investment income | $ (0.19) | $ (0.05) | $ — | $ (0.01) | $ (0.08) |
| From net realized gain | — | — | (0.07) | (0.23) | — |
| Total distributions | $ (0.19) | $ (0.05) | $ (0.07) | $ (0.24) | $ (0.08) |
| Net asset value — End of year | $10.07 | $10.14 | $10.39 | $10.79 | $ 10.64 |
| Total Return(2) | 1.27% | (1.89)% | (3.11)% | 3.70% | 3.88% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $ 2,098 | $ 3,252 | $ 4,603 | $ 7,473 | $24,622 |
| Ratios (as a percentage of average daily net assets): | |||||
| Total expenses | 1.50% | 1.51% | 1.55% | 1.57% | 1.63% |
| Net expenses | 1.50% (3) | 1.51% (3) | 1.55% | 1.57% | 1.63% |
| Net investment income (loss) | 2.10% | 0.71% | (0.16)% | 0.05% | 0.78% |
| Portfolio Turnover | 92% | 109% | 96% | 176% | 51% |
| (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) | 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 0.01% of average daily net assets for the years ended January 31, 2024 and 2023.) |
24
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Financial
Highlights — continued
| Short-Term
Municipal Bond Fund — Class I | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 10.18 | $ 10.45 | $ 10.83 | $ 10.66 | $ 10.35 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.30 | $ 0.18 | $ 0.09 | $ 0.11 | $ 0.19 |
| Net realized and unrealized gain (loss) | (0.07) | (0.27) | (0.32) | 0.40 | 0.30 |
| Total income (loss) from operations | $ 0.23 | $ (0.09) | $ (0.23) | $ 0.51 | $ 0.49 |
| Less Distributions | |||||
| From net investment income | $ (0.30) | $ (0.18) | $ (0.08) | $ (0.11) | $ (0.18) |
| From net realized gain | — | — | (0.07) | (0.23) | — |
| Total distributions | $ (0.30) | $ (0.18) | $ (0.15) | $ (0.34) | $ (0.18) |
| Net asset value — End of year | $ 10.11 | $ 10.18 | $ 10.45 | $ 10.83 | $ 10.66 |
| Total Return(1) | 2.29% | (0.85)% | (2.14)% | 4.77% | 4.82% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $112,946 | $148,903 | $207,787 | $253,382 | $157,176 |
| Ratios (as a percentage of average daily net assets): | |||||
| Total expenses | 0.50% | 0.51% | 0.55% | 0.57% | 0.63% |
| Net expenses | 0.50% (2) | 0.51% (2) | 0.55% | 0.57% | 0.63% |
| Net investment income | 3.10% | 1.73% | 0.84% | 0.92% | 1.77% |
| Portfolio Turnover | 92% | 109% | 96% | 176% | 51% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | 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 0.01% of average daily net assets for the years ended January 31, 2024 and 2023.) |
25
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Financial
Highlights — continued
| Intermediate-Term
Municipal Bond Fund — Class A | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 12.09 | $ 12.49 | $ 13.07 | $ 12.81 | $ 12.21 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.37 | $ 0.23 | $ 0.13 | $ 0.18 | $ 0.23 |
| Net realized and unrealized gain (loss) | (0.01) | (0.40) | (0.53) | 0.39 | 0.64 |
| Total income (loss) from operations | $ 0.36 | $ (0.17) | $ (0.40) | $ 0.57 | $ 0.87 |
| Less Distributions | |||||
| From net investment income | $ (0.36) | $ (0.23) | $ (0.13) | $ (0.18) | $ (0.23) |
| From net realized gain | — | — | (0.05) | (0.13) | (0.04) |
| Total distributions | $ (0.36) | $ (0.23) | $ (0.18) | $ (0.31) | $ (0.27) |
| Net asset value — End of year | $ 12.09 | $ 12.09 | $ 12.49 | $ 13.07 | $ 12.81 |
| Total Return(1) | 3.13% | (1.25)% | (3.08)% | 4.49% | 7.15% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $46,655 | $52,419 | $61,492 | $67,422 | $50,697 |
| Ratios (as a percentage of average daily net assets):(2) | |||||
| Total expenses | 1.00% | 1.03% | 1.02% | 0.99% | 0.98% |
| Net expenses | 0.84% (3) | 0.87% (3) | 0.90% | 0.90% | 0.90% |
| Net investment income | 3.20% | 1.96% | 1.09% | 1.41% | 1.81% |
| Portfolio Turnover | 127% | 159% | 61% | 104% | 74% |
| (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) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | 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 0.01% and less than 0.01% of average daily net assets for the years ended January 31, 2024 and 2023, respectively). |
26
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Financial
Highlights — continued
| Intermediate-Term
Municipal Bond Fund — Class C | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 12.08 | $ 12.48 | $ 13.07 | $ 12.81 | $ 12.21 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.29(1) | $ 0.14(1) | $ 0.04(1) | $ 0.09(1) | $ 0.13 |
| Net realized and unrealized gain (loss) | (0.00) (2) | (0.39) | (0.54) | 0.38 | 0.64 |
| Total income (loss) from operations | $ 0.29 | $ (0.25) | $ (0.50) | $ 0.47 | $ 0.77 |
| Less Distributions | |||||
| From net investment income | $ (0.28) | $ (0.15) | $ (0.04) | $ (0.08) | $ (0.13) |
| From net realized gain | — | — | (0.05) | (0.13) | (0.04) |
| Total distributions | $ (0.28) | $ (0.15) | $ (0.09) | $ (0.21) | $ (0.17) |
| Net asset value — End of year | $12.09 | $12.08 | $12.48 | $ 13.07 | $ 12.81 |
| Total Return(3) | 2.44% | (2.00)% | (3.88)% | 3.70% | 6.35% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $ 4,437 | $ 5,307 | $ 8,362 | $11,226 | $22,557 |
| Ratios (as a percentage of average daily net assets):(4) | |||||
| Total expenses | 1.75% | 1.78% | 1.77% | 1.74% | 1.73% |
| Net expenses | 1.59% (5) | 1.62% (5) | 1.65% | 1.65% | 1.65% |
| Net investment income | 2.44% | 1.17% | 0.34% | 0.72% | 1.08% |
| Portfolio Turnover | 127% | 159% | 61% | 104% | 74% |
| (1) | Computed using average shares outstanding. |
| (2) | Amount is less than $(0.005). |
| (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) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (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 0.01% and less than 0.01% of average daily net assets for the years ended January 31, 2024 and 2023, respectively). |
27
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Financial
Highlights — continued
| Intermediate-Term
Municipal Bond Fund — Class I | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 12.10 | $ 12.50 | $ 13.09 | $ 12.82 | $ 12.22 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.40 | $ 0.26 | $ 0.17 | $ 0.22 | $ 0.26 |
| Net realized and unrealized gain (loss) | (0.00) (1) | (0.40) | (0.54) | 0.39 | 0.64 |
| Total income (loss) from operations | $ 0.40 | $ (0.14) | $ (0.37) | $ 0.61 | $ 0.90 |
| Less Distributions | |||||
| From net investment income | $ (0.39) | $ (0.26) | $ (0.17) | $ (0.21) | $ (0.26) |
| From net realized gain | — | — | (0.05) | (0.13) | (0.04) |
| Total distributions | $ (0.39) | $ (0.26) | $ (0.22) | $ (0.34) | $ (0.30) |
| Net asset value — End of year | $ 12.11 | $ 12.10 | $ 12.50 | $ 13.09 | $ 12.82 |
| Total Return(2) | 3.39% | (1.01)% | (2.90)% | 4.82% | 7.41% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $414,852 | $506,284 | $619,232 | $537,216 | $404,214 |
| Ratios (as a percentage of average daily net assets):(3) | |||||
| Total expenses | 0.75% | 0.77% | 0.77% | 0.74% | 0.73% |
| Net expenses | 0.59% (4) | 0.61% (4) | 0.65% | 0.65% | 0.65% |
| Net investment income | 3.44% | 2.21% | 1.34% | 1.66% | 2.07% |
| Portfolio Turnover | 127% | 159% | 61% | 104% | 74% |
| (1) | Amount is less than $(0.005). |
| (2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (3) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (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 0.01% and less than 0.01% of average daily net assets for the years ended January 31, 2024 and 2023, respectively). |
28
See Notes to Financial Statements.
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements
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. In
connection with Rule 2a-5 of the 1940 Act, the Trustees have designated a Fund’s investment adviser as its valuation designee. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued
by the investment adviser, as valuation designee, at fair value using methods that most fairly reflect 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 January 31, 2024, 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.
29
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — 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.
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 tax character of distributions declared for the years ended
January 31, 2024 and January 31, 2023 was as follows:
| Year Ended January 31, 2024 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Tax-exempt income | $4,677,878 | $13,813,820 |
| Ordinary income | $1,205,516 | $ 2,919,347 |
| Year Ended January 31, 2023 | ||
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Tax-exempt income | $3,858,423 | $11,757,847 |
| Ordinary income | $ 434,108 | $ 868,031 |
30
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — continued
As of
January 31, 2024, the components of distributable earnings (accumulated loss) on a tax basis were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Undistributed tax-exempt income | $ 65,631 | $ 475,490 |
| Deferred capital losses | (14,663,453) | (36,083,167) |
| Net unrealized appreciation | 3,623,777 | 19,502,413 |
| Distributions payable | (120,948) | (490,114) |
| Accumulated loss | $(11,094,993) | $(16,595,378) |
At January 31, 2024, the following
Funds, for federal income tax purposes, had deferred capital losses which would reduce the respective Fund’s taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal
Revenue Code, and thus would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Funds of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the
first day of a Fund’s next taxable year and retain the same short-term or long-term character as when originally deferred. The amounts of the deferred capital losses are as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Deferred capital losses: | ||
| Short-term | $9,904,486 | $27,818,413 |
| Long-term | $4,758,967 | $ 8,264,754 |
The cost and unrealized appreciation (depreciation) of
investments of each Fund at January 31, 2024, as determined on a federal income tax basis, were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Aggregate cost | $168,844,324 | $443,678,862 |
| Gross unrealized appreciation | $ 3,962,720 | $ 19,860,418 |
| Gross unrealized depreciation | (338,942) | (358,006) |
| Net unrealized appreciation | $ 3,623,778 | $ 19,502,412 |
31
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — 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:
| Annual Fee Rate | ||
| Average Daily Net Assets | Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund |
| Up to $1 billion | 0.3500% | 0.5000% |
| $1 billion but less than $2 billion | 0.3375% | 0.4750% |
| $2 billion but less than $5 billion | 0.3250% | 0.4550% |
| $5 billion and over | 0.3175% | 0.4400% |
For the year ended January 31, 2024,
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 | $721,746 | $2,543,589 |
| Effective Annual Rate | 0.35% | 0.50% |
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.
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 year ended
January 31, 2024, the investment adviser and administration fee paid was reduced by $9,653 and $46,781 for Short-Term Municipal Bond Fund and Intermediate-Term Municipal Bond Fund, respectively, relating to each Fund’s investment in the
Liquidity 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, and 0.85%, 1.60% and 0.60% 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, 2024. Pursuant to these agreements, EVM and Parametric were allocated none and $767,717 in total of
Short-Term Municipal Bond Fund's and Intermediate-Term Municipal Bond Fund's operating expenses, respectively, for the year ended January 31, 2024.
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
32
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — 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 year ended January 31, 2024 were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| EVM's Sub-Transfer Agent Fees | $5,980 | $5,269 |
| EVD's Class A Sales Charges | $ 77 | $3,545 |
| Morgan Stanley affiliated broker-dealers’ Class A Sales Charges | $ — | $ 450 |
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. 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 year ended January 31, 2024 for Class A shares amounted to the
following:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class A Distribution and Service Fees | $174,076 | $124,558 |
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 Funds. For the year ended January 31, 2024, 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 | $19,879 | $34,037 |
Pursuant to the Class C Plan, each
Fund 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 year ended January 31, 2024 amounted to the
following:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class C Service Fees | $6,626 | $11,346 |
Distribution and service fees are
subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
33
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — 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% CDSC if redeemed within 12 months 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 year ended January 31, 2024, the Funds were informed that EVD received
the following amount of CDSCs paid by Class A shareholders and no CDSCs paid by Class C shareholders.
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Class A | $1,873 | $ — |
6 Purchases and Sales of
Investments
Purchases and sales of investments, other
than short-term obligations, for the year ended January 31, 2024 were as follows:
| Short-Term
Municipal Bond Fund |
Intermediate-Term
Municipal Bond Fund | |
| Purchases | ||
| Investments (non-U.S. Government) | $ 129,475,762 | $ 457,822,291 |
| U.S. Government and Agency Securities | 51,914,095 | 155,910,991 |
| Total Purchases | $181,389,857 | $613,733,282 |
| Sales | ||
| Investments (non-U.S. Government) | $ 157,512,444 | $ 564,044,645 |
| U.S. Government and Agency Securities | 59,975,093 | 108,775,089 |
| Total Sales | $217,487,537 | $672,819,734 |
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, including
direct exchanges pursuant to share class conversions, were as follows:
| Short-Term Municipal Bond Fund | ||||||
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | |||||
| Shares | Amount | Shares | Amount | |||
| Class A | ||||||
| Sales | 431,702 | $ 4,309,032 | 783,048 | $ 7,795,113 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 152,110 | 1,518,594 | 116,415 | 1,162,445 | ||
| Redemptions | (2,118,258) | (21,128,902) | (4,686,641) | (46,907,196) | ||
| Net decrease | (1,534,446) | $(15,301,276) | (3,787,178) | $ (37,949,638) | ||
34
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — continued
| Short-Term Municipal Bond Fund (continued) | ||||||
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | |||||
| Shares | Amount | Shares | Amount | |||
| Class C | ||||||
| Sales | 17,099 | $ 169,006 | 73,863 | $ 729,992 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 4,133 | 41,112 | 1,323 | 13,128 | ||
| Redemptions | (133,765) | (1,325,266) | (197,500) | (1,964,142) | ||
| Net decrease | (112,533) | $ (1,115,148) | (122,314) | $ (1,221,022) | ||
| Class I | ||||||
| Sales | 2,389,210 | $ 23,964,022 | 6,020,814 | $ 60,254,992 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 277,896 | 2,774,821 | 194,391 | 1,942,905 | ||
| Redemptions | (6,132,898) | (61,021,796) | (11,460,257) | (115,153,544) | ||
| Net decrease | (3,465,792) | $(34,282,953) | (5,245,052) | $ (52,955,647) | ||
| Intermediate-Term Municipal Bond Fund | ||||||
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | |||||
| Shares | Amount | Shares | Amount | |||
| Class A | ||||||
| Sales | 1,163,376 | $ 13,811,622 | 1,824,390 | $ 21,436,685 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 59,370 | 701,621 | 42,738 | 502,881 | ||
| Redemptions | (1,702,245) | (20,016,338) | (2,453,737) | (28,778,047) | ||
| Net decrease | (479,499) | $ (5,503,095) | (586,609) | $ (6,838,481) | ||
| Class C | ||||||
| Sales | 83,293 | $ 987,954 | 117,657 | $ 1,382,809 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 4,570 | 54,038 | 2,971 | 34,873 | ||
| Redemptions | (160,172) | (1,895,310) | (351,217) | (4,150,096) | ||
| Net decrease | (72,309) | $ (853,318) | (230,589) | $ (2,732,414) | ||
| Class I | ||||||
| Sales | 18,509,621 | $ 219,341,382 | 29,555,474 | $ 350,119,216 | ||
| Issued to shareholders electing to receive payments of distributions in Fund shares | 657,484 | 7,775,156 | 410,084 | 4,827,083 | ||
| Redemptions | (26,747,553) | (317,849,009) | (37,652,147) | (444,779,366) | ||
| Net decrease | (7,580,448) | $ (90,732,471) | (7,686,589) | $ (89,833,067) | ||
35
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — continued
8 Line of Credit
The Funds participate with other portfolios and funds managed
by EVM and its affiliates in a $650 million unsecured revolving line of credit agreement with a group of banks, which is in effect through October 22, 2024. In connection with the renewal of the agreement on October 24, 2023, the borrowing limit was
decreased from $725 million. 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 2023, an arrangement fee of $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, it 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 year ended January 31, 2024.
9 Affiliated Investments
At January 31, 2024, the value of each Fund’s investment
in funds that may be deemed to be affiliated was $2,520,558 for Short-Term Municipal Bond Fund, which represents 1.4% of its net assets, and $9,129,656 for Intermediate-Term Municipal Bond Fund, which represents 2.0% of its net
assets. Transactions in such investments by the Funds for the year ended January 31, 2024 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 | $20,836,467 | $131,364,596 | $(149,680,505) | $ — | $ — | $2,520,558 | $302,545 | 2,520,558 |
| 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 | $49,021,044 | $391,374,855 | $(431,266,243) | $ — | $ — | $9,129,656 | $1,508,019 | 9,129,656 |
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.
36
Parametric
TABS Municipal Bond Funds
January 31, 2024
Notes to Financial
Statements — continued
At
January 31, 2024, the hierarchy of inputs used in valuing the Funds' investments, which are carried at fair value, were as follows:
| Short-Term
Municipal Bond Fund |
||||
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 146,938,020 | $ — | $ 146,938,020 |
| Taxable Municipal Obligations | — | 659,919 | — | 659,919 |
| U.S. Treasury Obligations | — | 22,349,605 | — | 22,349,605 |
| Short-Term Investments | 2,520,558 | — | — | 2,520,558 |
| Total Investments | $ 2,520,558 | $ 169,947,544 | $ — | $172,468,102 |
| Intermediate-Term
Municipal Bond Fund |
||||
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 366,531,036 | $ — | $ 366,531,036 |
| Taxable Municipal Obligations | — | 968,524 | — | 968,524 |
| U.S. Treasury Obligations | — | 86,552,058 | — | 86,552,058 |
| Short-Term Investments | 9,129,656 | — | — | 9,129,656 |
| Total Investments | $ 9,129,656 | $ 454,051,618 | $ — | $463,181,274 |
37
Parametric
TABS Municipal Bond Funds
January 31, 2024
Report of Independent
Registered Public Accounting Firm
To the
Trustees of Eaton Vance Municipals Trust II and Shareholders of Parametric TABS Short-Term Municipal Bond Fund and Parametric TABS Intermediate-Term Municipal Bond Fund:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying statements of
assets and liabilities of Parametric TABS Short-Term Municipal Bond Fund and Parametric TABS Intermediate-Term Municipal Bond Fund (collectively, the “Funds”) (certain of the funds constituting Eaton Vance Municipals Trust II), including
the portfolios of investments, as of January 31, 2024, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the
five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of January 31, 2024, and the results of
their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
Basis
for Opinion
These financial statements and financial
highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our
audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement,
whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements and financial highlights. Our procedures included confirmation of securities owned as of January 31, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 20, 2024
Boston, Massachusetts
March 20, 2024
We have served as the auditor of one or
more Eaton Vance investment companies since 1959.
38
Parametric
TABS Municipal Bond Funds
January 31, 2024
Federal Tax
Information (Unaudited)
The
Form 1099-DIV you receive in February 2025 will show the tax status of all distributions paid to your account in calendar year 2024. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment
in the Funds. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding the status of exempt-interest dividends.
Exempt-Interest Dividends. For
the fiscal year ended January 31, 2024, the Funds designate the following percentages of distributions from net investment income as exempt-interest dividends:
| TABS Short-Term Municipal Bond Fund | 79.51% |
| TABS Intermediate-Term Municipal Bond Fund | 82.55% |
39
Parametric
TABS Municipal Bond Funds
January 31, 2024
Management and
Organization
Fund
Management. The Trustees of Eaton Vance Municipals Trust II (the Trust) are responsible for the overall management and supervision of the Trust's affairs. The Board members and officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Board members hold indefinite terms of office. Each Trustee holds office until his or her successor is elected and
qualified, subject to a prior death, resignation, retirement, disqualification or removal. Under the terms of the Fund's current Trustee retirement policy, an Independent Trustee must retire and resign as a Trustee on the earlier of: (i) the first
day of July following his or her 74th birthday; or (ii), with limited exception, December 31st of the 20th year in which he or she has served as a Trustee. However, if such retirement and resignation would cause the Fund to be out of compliance with
Section 16 of the 1940 Act or any other regulations or guidance of the SEC, then such retirement and resignation will not become effective until such time as action has been taken for the Fund to be in compliance therewith. The “noninterested
Trustees” consist of those Trustees who are not “interested persons” of the Trust, as that term is defined under the 1940 Act. The business address of each Board member and officer is One Post Office Square, Boston, Massachusetts
02109. As used below, “BMR” refers to Boston Management and Research, “EV” refers to EV LLC, “EVM” refers to Eaton Vance Management, "MSIM" refers to Morgan Stanley Investment Management Inc. and “EVD”
refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. Each of EVM, BMR, EVD and EV are indirect, wholly owned subsidiaries of Morgan Stanley. Each officer affiliated with EVM may hold a position with other EVM affiliates
that is comparable to his or her position with EVM listed below. Each Trustee oversees 127 funds in the Eaton Vance fund complex (including both funds and portfolios in a hub and spoke structure).
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Interested Trustee | |||
| Anchal
Pachnanda(1) 1980 |
Trustee | Since 2023 | Co-Head of
Strategy of MSIM (since 2019). Formerly, Head of Strategy of MSIM (2017-2019). Ms. Pachnanda is an interested person because of her position with MSIM, which is an affiliate of the Trust. Other Directorships. None. |
| Noninterested Trustees | |||
| Alan
C. Bowser 1962 |
Trustee | Since 2022 | Private investor.
Formerly, Chief Diversity Officer, Partner and a member of the Operating Committee, and formerly served as Senior Advisor on Diversity and Inclusion for the firm’s chief executive officer, Co-Head of the Americas Region, and Senior Client
Advisor of Bridgewater Associates, an asset management firm (2011- 2023). Other Directorships. Independent Director of Stout Risius Ross (a middle market professional services advisory firm) (since 2021). |
| Mark
R. Fetting 1954 |
Trustee | Since 2016 | Private investor.
Formerly held various positions at Legg Mason, Inc. (investment management firm) (2000-2012), including President, Chief Executive Officer, Director and Chairman (2008-2012), Senior Executive Vice President (2004-2008) and Executive Vice President
(2001-2004). Formerly, President of Legg Mason family of funds (2001-2008). Formerly, Division President and Senior Officer of Prudential Financial Group, Inc. and related companies (investment management firm) (1991-2000). Other Directorships. None. |
| Cynthia
E. Frost 1961 |
Trustee | Since 2014 | Private investor.
Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012). Formerly, Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000). Formerly, Managing Director, Cambridge Associates
(investment consulting company) (1989-1995). Formerly, Consultant, Bain and Company (management consulting firm) (1987-1989). Formerly, Senior Equity Analyst, BA Investment Management Company (1983-1985). Other Directorships. None. |
| George
J. Gorman 1952 |
Chairperson
of the Board and Trustee |
Since
2021 (Chairperson) and 2014 (Trustee) |
Principal
at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (a registered public accounting firm) (1974-2009). Other Directorships. None. |
40
Parametric
TABS Municipal Bond Funds
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Noninterested Trustees (continued) | |||
| Valerie
A. Mosley 1960 |
Trustee | Since 2014 | Chairwoman
and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Founder of Upward Wealth, Inc., dba BrightUp, a fintech platform. Formerly, Partner and Senior Vice President, Portfolio Manager and Investment Strategist at
Wellington Management Company, LLP (investment management firm) (1992-2012). Formerly, Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990). Other Directorships. Director of DraftKings, Inc. (digital sports entertainment and gaming company) (since September 2020). Director of Envestnet, Inc. (provider of intelligent systems for wealth management and financial wellness) (since 2018). Formerly, Director of Dynex Capital, Inc. (mortgage REIT) (2013-2020) and Director of Groupon, Inc. (e-commerce provider) (2020-2022). |
| Keith
Quinton 1958 |
Trustee | Since 2018 | Private investor,
researcher and lecturer. Formerly, Independent Investment Committee Member at New Hampshire Retirement System (2017-2021). Formerly, Portfolio Manager and Senior Quantitative Analyst at Fidelity Investments (investment management firm)
(2001-2014). Other Directorships. Formerly, Director (2016-2021) and Chairman (2019-2021) of New Hampshire Municipal Bond Bank. |
| Marcus
L. Smith 1966 |
Trustee | Since 2018 | Private investor
and independent corporate director. Formerly, Chief Investment Officer, Canada (2012-2017), Chief Investment Officer, Asia (2010-2012), Director of Asian Research (2004-2010) and portfolio manager (2001-2017) at MFS Investment Management
(investment management firm). Other Directorships. Director of First Industrial Realty Trust, Inc. (an industrial REIT) (since 2021). Director of MSCI Inc. (global provider of investment decision support tools) (since 2017). Formerly, Director of DCT Industrial Trust Inc. (logistics real estate company) (2017-2018). |
| Susan
J. Sutherland 1957 |
Trustee | Since 2015 | Private investor.
Director of Ascot Group Limited and certain of its subsidiaries (insurance and reinsurance) (since 2017). Formerly, Director of Hagerty Holding Corp. (insurance) (2015-2018) and Montpelier Re Holdings Ltd. (insurance and reinsurance) (2013-2015).
Formerly, Associate, Counsel and Partner at Skadden, Arps, Slate, Meagher & Flom LLP (law firm) (1982-2013). Other Directorships. Formerly, Director of Kairos Acquisition Corp. (insurance/InsurTech acquisition company) (2021-2023). |
| Scott
E. Wennerholm 1959 |
Trustee | Since 2016 | Private investor.
Formerly, Trustee at Wheelock College (postsecondary institution) (2012-2018). Formerly, Consultant at GF Parish Group (executive recruiting firm) (2016-2017). Formerly, Chief Operating Officer and Executive Vice President at BNY Mellon Asset
Management (investment management firm) (2005-2011). Formerly, Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm) (1997-2004). Formerly, Vice President at Fidelity Investments
Institutional Services (investment management firm) (1994-1997). Other Directorships. None. |
| Nancy
A. Wiser 1967 |
Trustee | Since 2022 | Formerly,
Executive Vice President and the Global Head of Operations at Wells Fargo Asset Management (2011-2021). Other Directorships. None. |
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees | |||
| Kenneth
A. Topping 1966 |
President | Since 2023 | Vice President and Chief Administrative Officer of EVM and BMR and Chief Operating Officer for Public Markets at MSIM. Also Vice President of Calvert Research and Management (“CRM”) since 2021. Formerly, Chief Operating Officer for Goldman Sachs Asset Management 'Classic’ (2009-2020). |
| Deidre
E. Walsh 1971 |
Vice
President and Chief Legal Officer |
Since 2009 | Vice President of EVM and BMR. Also Vice President of CRM. |
| James
F. Kirchner 1967 |
Treasurer | Since 2007 | Vice President of EVM and BMR. Also Vice President of CRM. |
41
Parametric
TABS Municipal Bond Funds
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees (continued) | |||
| Nicholas
S. Di Lorenzo 1987 |
Secretary | Since 2022 | Formerly, associate (2012-2021) and counsel (2022) at Dechert LLP. |
| Laura
T. Donovan 1976 |
Chief
Compliance Officer |
Since 2024 | Vice President of EVM and BMR. |
(1) Ms. Pachnanda began serving as Trustee effective April 1, 2023.
The SAI for the Fund includes additional information about the
Trustees and officers of the Funds and can be obtained without charge on Eaton Vance’s website at www.eatonvance.com or by calling 1-800-260-0761.
42
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 |
43
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. | |
44
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.
Tailored Shareholder Reports. Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging
streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of
charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Eaton
Vance Funds.
45
* 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
Annual Report
January 31, 2024
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.
Annual Report January 31, 2024
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Management’s Discussion of Fund Performance†
Economic and Market Conditions
For municipal bond investors, the 12-month period ended January
31, 2024, may be described as a roller-coaster ride driven by changing expectations of how long the U.S. Federal Reserve (the Fed) might keep raising the federal funds rate to tame inflation, and how high rates might go.
As the period opened in February 2023, a months-long municipal
bond rally stalled as robust economic reports led investors to fear the Fed might keep rates higher for longer than previously expected.
In March 2023, however, municipal bond performance turned
positive following the failure of two regional U.S. banks that triggered a “flight to quality” that, in turn, lifted municipal bonds to their strongest March performance since 2008 -- despite the Fed raising rates for a ninth consecutive
time that month.
In April 2023, the municipal bond market
began another sell-off. Although positive technical factors -- particularly municipal bond demand that exceeded supply -- produced brief periods of positive performance, the Fed’s tenth and eleventh rate hikes in a little over a year -- in May
and July 2023 -- caused municipal yields to rise and bond prices to fall.
From August through October 2023, above-average supply -- plus
an end-of-summer slowdown in coupon reinvestment -- reduced demand for municipal bonds even more. Although the Fed left interest rates unchanged in September 2023, investors interpreted the message to be that rates might stay higher for longer than
expected just weeks earlier -- adding fuel to the municipal bond sell-off.
In November and December 2023, the municipal bond market
reversed course. After several consecutive months of negative returns and rising rates, federal tax-free municipal yields approached their 2022 highs, giving investors a compelling reason to buy municipal bonds.
Typical calendar year-end technical factors -- particularly
constrained supplies and increased demand -- were additional tailwinds for municipal bond prices. Falling inflation and easing employment gains also led many investors to believe the Fed was done raising rates. As a result, the Bloomberg Municipal
Bond Index (the Municipal Index) returned 6.35% in November 2023, its best monthly performance since 1982.
In December 2023, the Municipal Index posted another solid
monthly gain as investors began to conclude the Fed might actually begin lowering interest rates as early as March 2024. In the final month of the period, however, municipal returns turned negative as municipal bonds -- following a strong year-end
rally -- appeared overvalued relative to U.S. Treasurys. Strong U.S. economic reports led investors to push expectations of a potential rate cut out to mid-2024, weighing on municipal returns during the period.
For the period as a whole, the Municipal Index returned
2.90%. Yields rose and prices fell across the municipal bond yield curve. Municipal bonds outperformed U.S. Treasurys in the middle- and long-maturity areas of the curve, but underperformed Treasurys in the short-maturity portion of the yield curve.
During the period, lower-rated bonds generally outperformed higher-rated bonds, while longer-maturity bonds outperformed shorter-maturity bonds.
Fund Performance
For the 12-month period ended January 31, 2024, Parametric TABS
5-to-15 Year Laddered Municipal Bond Fund (the Fund) returned 3.23% for Class A shares at net asset value (NAV), outperforming its benchmark, the Bloomberg 10 Year Municipal Bond Index (the Index), which returned 2.49%.
The Index is unmanaged, and returns do not reflect applicable
sales charges, commissions, or expenses.
The Fund seeks
to invest primarily in general obligation bonds and revenue bonds. The Fund seeks to weigh investments so that at least 5% -- and not more than 15% -- of its net assets are invested in obligations with a final maturity in a year within the 5-to-15
year maturity range. The Fund’s objective is to seek current income exempt from regular federal income tax. The investment sub-adviser’s process for selecting obligations for purchase and sale emphasizes the creditworthiness of the
issuer or other persons obligated to repay the obligation, and the relative value of the obligation in the market.
Relative-value trading -- a strategy that seeks to take
advantage of price and rate differences among similar securities -- contributed to Fund performance relative to the Index during the period.
Yield-curve positioning -- largely determined by the
Fund’s equal-weighted laddered structure -- also contributed to Fund performance versus the Index.
With exposures from 5 to 15 years, the Fund inherently holds overweight positions in longer-maturity bonds because the Index is composed mainly of bonds with 8-12 years remaining to maturity. During a period when longer-maturity bonds generally outperformed shorter-maturity bonds, the Fund’s out-of-Index exposure to bonds with maturities longer than 12 years benefited Index-relative returns, particularly when the municipal bond market rallied in November and December 2023.
With exposures from 5 to 15 years, the Fund inherently holds overweight positions in longer-maturity bonds because the Index is composed mainly of bonds with 8-12 years remaining to maturity. During a period when longer-maturity bonds generally outperformed shorter-maturity bonds, the Fund’s out-of-Index exposure to bonds with maturities longer than 12 years benefited Index-relative returns, particularly when the municipal bond market rallied in November and December 2023.
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
January 31, 2024
Management’s
Discussion of Fund Performance† — continued
Duration management contributed to Index-relative returns as
well. During the period, the Fund maintained a longer duration than that of the Index. The Fund further increased its duration in June 2023. While this proved to be somewhat premature and detracted from Index-relative returns as municipal interest
rates rose through October 2023, the longer duration positioning helped the Fund’s relative performance when municipal bonds rallied in November and December. For the period as a whole, duration positioning was a net contributor to performance
versus the Index.
In contrast, credit-quality allocations
detracted from Fund returns relative to the Index. The Fund held an overweight position in high quality AAA-rated bonds during a period when higher-quality securities generally underperformed lower-quality securities.
An overweight position in the housing sector also detracted
from Index-relative performance, as the housing sector -- generally valued for its relatively high income potential compared to other sectors -- underperformed the Index during the period.
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.
3
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
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 |
One Year | Five Years | Ten Years |
| Class A at NAV | 02/01/2010 | 02/01/2010 | 3.23% | 2.03% | 3.25% |
| Class A with 3.25% Maximum Sales Charge | — | — | (0.12) | 1.36 | 2.91 |
| Class C at NAV | 02/01/2010 | 02/01/2010 | 2.54 | 1.27 | 2.63 |
| Class C with 1% Maximum Deferred Sales Charge | — | — | 1.54 | 1.27 | 2.63 |
| Class I at NAV | 02/01/2010 | 02/01/2010 | 3.49 | 2.28 | 3.51 |
|
| |||||
| Bloomberg 10 Year Municipal Bond Index | — | — | 2.49% | 2.24% | 2.97% |
| Bloomberg 15 Year Municipal Bond Index | — | — | 3.62 | 2.50 | 3.48 |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 0.67% | 1.42% | 0.42% |
| Net | 0.65 | 1.40 | 0.40 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 2.74% | 1.98% | 2.99% |
| SEC 30-day Yield – Subsidized | 2.58 | 1.92 | 2.92 |
| SEC 30-day Yield – Unsubsidized | 2.58 | 1.92 | 2.92 |
Growth of $10,000
This graph shows the change in value of a hypothetical
investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
| Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge |
| Class C | $10,000 | 01/31/2014 | $12,971 | N.A. |
| Class I, at minimum investment | $1,000,000 | 01/31/2014 | $1,412,255 | N.A. |
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 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Fund Profile
| Credit Quality (% of total investments)1 |
Footnotes:
| 1 | 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 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Endnotes and
Additional Disclosures
6
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases; 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 (August 1, 2023
to January 31, 2024).
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). 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 (8/1/23) |
Ending
Account Value (1/31/24) |
Expenses
Paid During Period* (8/1/23 – 1/31/24) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $1,034.50 | $3.33** | 0.65% |
| Class C | $1,000.00 | $1,030.60 | $7.17** | 1.40% |
| Class I | $1,000.00 | $1,034.90 | $2.05** | 0.40% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,021.93 | $3.31** | 0.65% |
| Class C | $1,000.00 | $1,018.15 | $7.12** | 1.40% |
| Class I | $1,000.00 | $1,023.19 | $2.04** | 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 184/365 (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 July 31, 2023. |
| ** | Absent an allocation of certain expenses to affiliate(s), expenses would be higher. |
7
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments
8
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
9
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
10
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
11
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
12
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
13
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
14
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
15
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
16
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Statement of Assets
and Liabilities
| January 31, 2024 | |
| Assets | |
| Unaffiliated investments, at value (identified cost $650,166,806) | $ 667,848,445 |
| Affiliated investments, at value (identified cost $36,302,705) | 36,302,705 |
| Cash | 68,565 |
| Interest receivable | 6,964,215 |
| Dividends receivable from affiliated investments | 131,643 |
| Receivable for investments sold | 206,426 |
| Receivable for Fund shares sold | 1,267,091 |
| Trustees' deferred compensation plan | 34,256 |
| Total assets | $712,823,346 |
| Liabilities | |
| Payable for investments purchased | $ 117,128 |
| Payable for when-issued securities | 1,540,083 |
| Payable for Fund shares redeemed | 1,572,623 |
| Distributions payable | 243,524 |
| Payable to affiliates: | |
| Investment adviser fee | 185,451 |
| Distribution and service fees | 23,689 |
| Trustees' deferred compensation plan | 34,256 |
| Other | 6,221 |
| Accrued expenses | 349,796 |
| Total liabilities | $ 4,072,771 |
| Net Assets | $708,750,575 |
| Sources of Net Assets | |
| Paid-in capital | $ 764,914,177 |
| Accumulated loss | (56,163,602) |
| Net Assets | $708,750,575 |
| Class A Shares | |
| Net Assets | $ 55,676,436 |
| Shares Outstanding | 4,540,427 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 12.26 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 12.67 |
| Class C Shares | |
| Net Assets | $ 13,690,694 |
| Shares Outstanding | 1,117,071 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 12.26 |
| Class I Shares | |
| Net Assets | $ 639,383,445 |
| Shares Outstanding | 52,183,723 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 12.25 |
| 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. |
17
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Statement of
Operations
| Year Ended | |
| January 31, 2024 | |
| Investment Income | |
| Dividend income from affiliated investments | $ 784,829 |
| Dividend income allocated from Portfolio | 607,836 |
| Interest income allocated from Portfolio | 6,254,464 |
| Interest income | 16,595,430 |
| Expenses allocated from Portfolio | (697,437) |
| Total investment income | $ 23,545,122 |
| Expenses | |
| Investment adviser and administration fee | $ 1,536,516 |
| Distribution and service fees: | |
| Class A | 154,569 |
| Class C | 166,117 |
| Trustees’ fees and expenses | 44,341 |
| Custodian fee | 180,258 |
| Transfer and dividend disbursing agent fees | 256,027 |
| Legal and accounting services | 65,815 |
| Printing and postage | 27,460 |
| Registration fees | 75,294 |
| Miscellaneous | 34,895 |
| Total expenses | $ 2,541,292 |
| Deduct: | |
| Waiver and/or reimbursement of expenses by affiliates | $ 247,093 |
| Total expense reductions | $ 247,093 |
| Net expenses | $ 2,294,199 |
| Net investment income | $ 21,250,923 |
| Realized and Unrealized Gain (Loss) | |
| Net realized gain (loss): | |
| Investment transactions | $ (5,324,986) |
| Investment transactions allocated from Portfolio | (797,421) |
| Net realized loss | $ (6,122,407) |
| Change in unrealized appreciation (depreciation): | |
| Investments | $ 19,575,102 |
| Investments allocated from Portfolio | (13,149,521) |
| Net change in unrealized appreciation (depreciation) | $ 6,425,581 |
| Net realized and unrealized gain | $ 303,174 |
| Net increase in net assets from operations | $ 21,554,097 |
18
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Statements of Changes
in Net Assets
| Year Ended January 31, | ||
| 2024 | 2023 | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 21,250,923 | $ 15,433,083 |
| Net realized loss | (6,122,407) | (40,253,585) |
| Net change in unrealized appreciation (depreciation) | 6,425,581 | (5,317,574) |
| Net increase (decrease) in net assets from operations | $ 21,554,097 | $ (30,138,076) |
| Distributions to shareholders: | ||
| Class A | $ (1,714,898) | $ (1,368,606) |
| Class C | (335,289) | (300,648) |
| Class I | (18,170,240) | (13,662,672) |
| Total distributions to shareholders | $ (20,220,427) | $ (15,331,926) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (7,243,039) | $ (15,662,442) |
| Class C | (6,675,645) | (8,866,410) |
| Class I | 90,960,347 | (237,643,793) |
| Net increase (decrease) in net assets from Fund share transactions | $ 77,041,663 | $(262,172,645) |
| Other capital: | ||
| Portfolio transaction fee contributed to Portfolio | $ — | $ (675,116) |
| Portfolio transaction fee allocated from Portfolio | — | 674,003 |
| Net decrease in net assets from other capital | $ — | $ (1,113) |
| Net increase (decrease) in net assets | $ 78,375,333 | $(307,643,760) |
| Net Assets | ||
| At beginning of year | $ 630,375,242 | $ 938,019,002 |
| At end of year | $708,750,575 | $ 630,375,242 |
19
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Financial
Highlights
| Class A | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 12.21 | $ 12.70 | $ 13.24 | $ 12.90 | $ 12.22 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.33 | $ 0.24 | $ 0.18 | $ 0.21 | $ 0.24 |
| Net realized and unrealized gain (loss) | 0.05 | (0.49) | (0.54) | 0.34 | 0.68 |
| Total income (loss) from operations | $ 0.38 | $ (0.25) | $ (0.36) | $ 0.55 | $ 0.92 |
| Less Distributions | |||||
| From net investment income | $ (0.33) | $ (0.24) | $ (0.18) | $ (0.21) | $ (0.24) |
| Total distributions | $ (0.33) | $ (0.24) | $ (0.18) | $ (0.21) | $ (0.24) |
| Net asset value — End of year | $ 12.26 | $ 12.21 | $ 12.70 | $ 13.24 | $ 12.90 |
| Total Return(1) | 3.23% | (1.88)% | (2.73)% | 4.34% | 7.56% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $55,676 | $62,567 | $81,892 | $88,983 | $85,608 |
| Ratios (as a percentage of average daily net assets):(2)(3) | |||||
| Total expenses | 0.68% | 0.68% | 0.66% | 0.68% | 0.67% |
| Net expenses | 0.64% (4) | 0.65% (4) | 0.65% | 0.65% | 0.65% |
| Net investment income | 2.93% | 2.02% | 1.39% | 1.65% | 1.88% |
| Portfolio Turnover of the Portfolio(5) | 6% | 84% | 22% | 51% | 28% |
| Portfolio Turnover of the Fund | 52% (6) | — | — | — | — |
| (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) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | Includes the Fund’s share of the Portfolio's allocated expenses for the period while the Fund was investing in the Portfolio. |
| (4) | Includes a reduction by the investment adviser of a portion of its adviser and administration fee due to the Fund’s and Portfolio’s investment in the Liquidity Fund (equal to 0.01% and less than 0.005% of average daily net assets for the years ended January 31, 2024 and 2023, respectively). |
| (5) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
| (6) | For the period from May 20, 2023 through January 31, 2024 when the Fund was making investments directly in securities. |
| References to Portfolio herein are to 5-to-15 Year Laddered Municipal Bond Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to the close of business on May 19, 2023 and which had the same investment objectives and policies as the Fund during such period. | |
20
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Financial
Highlights — continued
| Class C | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 12.20 | $ 12.69 | $ 13.23 | $ 12.89 | $ 12.22 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.24 | $ 0.15 | $ 0.08 | $ 0.12 | $ 0.14 |
| Net realized and unrealized gain (loss) | 0.06 | (0.49) | (0.54) | 0.34 | 0.67 |
| Total income (loss) from operations | $ 0.30 | $ (0.34) | $ (0.46) | $ 0.46 | $ 0.81 |
| Less Distributions | |||||
| From net investment income | $ (0.24) | $ (0.15) | $ (0.08) | $ (0.12) | $ (0.14) |
| Total distributions | $ (0.24) | $ (0.15) | $ (0.08) | $ (0.12) | $ (0.14) |
| Net asset value — End of year | $ 12.26 | $ 12.20 | $ 12.69 | $ 13.23 | $ 12.89 |
| Total Return(1) | 2.54% | (2.62)% | (3.47)% | 3.56% | 6.68% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $13,691 | $20,513 | $30,795 | $37,239 | $41,689 |
| Ratios (as a percentage of average daily net assets):(2)(3) | |||||
| Total expenses | 1.43% | 1.43% | 1.41% | 1.43% | 1.42% |
| Net expenses | 1.39% (4) | 1.40% (4) | 1.40% | 1.40% | 1.40% |
| Net investment income | 2.17% | 1.26% | 0.64% | 0.91% | 1.13% |
| Portfolio Turnover of the Portfolio(5) | 6% | 84% | 22% | 51% | 28% |
| Portfolio Turnover of the Fund | 52% (6) | — | — | — | — |
| (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) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | Includes the Fund’s share of the Portfolio's allocated expenses for the period while the Fund was investing in the Portfolio. |
| (4) | Includes a reduction by the investment adviser of a portion of its adviser and administration fee due to the Fund’s and Portfolio’s investment in the Liquidity Fund (equal to 0.01% and less than 0.005% of average daily net assets for the years ended January 31, 2024 and 2023, respectively). |
| (5) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
| (6) | For the period from May 20, 2023 through January 31, 2024 when the Fund was making investments directly in securities. |
| References to Portfolio herein are to 5-to-15 Year Laddered Municipal Bond Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to the close of business on May 19, 2023 and which had the same investment objectives and policies as the Fund during such period. | |
21
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Financial
Highlights — continued
| Class I | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 12.20 | $ 12.69 | $ 13.23 | $ 12.89 | $ 12.21 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.36 | $ 0.27 | $ 0.22 | $ 0.25 | $ 0.27 |
| Net realized and unrealized gain (loss) | 0.05 | (0.49) | (0.54) | 0.34 | 0.68 |
| Total income (loss) from operations | $ 0.41 | $ (0.22) | $ (0.32) | $ 0.59 | $ 0.95 |
| Less Distributions | |||||
| From net investment income | $ (0.36) | $ (0.27) | $ (0.22) | $ (0.25) | $ (0.27) |
| Total distributions | $ (0.36) | $ (0.27) | $ (0.22) | $ (0.25) | $ (0.27) |
| Net asset value — End of year | $ 12.25 | $ 12.20 | $ 12.69 | $ 13.23 | $ 12.89 |
| Total Return(1) | 3.49% | (1.64)% | (2.49)% | 4.60% | 7.83% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $639,383 | $547,295 | $825,332 | $776,298 | $596,099 |
| Ratios (as a percentage of average daily net assets):(2)(3) | |||||
| Total expenses | 0.43% | 0.43% | 0.41% | 0.43% | 0.42% |
| Net expenses | 0.39% (4) | 0.40% (4) | 0.40% | 0.40% | 0.40% |
| Net investment income | 3.17% | 2.25% | 1.64% | 1.89% | 2.12% |
| Portfolio Turnover of the Portfolio(5) | 6% | 84% | 22% | 51% | 28% |
| Portfolio Turnover of the Fund | 52% (6) | — | — | — | — |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | Includes the Fund’s share of the Portfolio's allocated expenses for the period while the Fund was investing in the Portfolio. |
| (4) | Includes a reduction by the investment adviser of a portion of its adviser and administration fee due to the Fund’s and Portfolio’s investment in the Liquidity Fund (equal to 0.01% and less than 0.005% of average daily net assets for the years ended January 31, 2024 and 2023, respectively). |
| (5) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
| (6) | For the period from May 20, 2023 through January 31, 2024 when the Fund was making investments directly in securities. |
| References to Portfolio herein are to 5-to-15 Year Laddered Municipal Bond Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to the close of business on May 19, 2023 and which had the same investment objectives and policies as the Fund during such period. | |
22
See Notes to Financial Statements.
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements
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’s investment objective is to seek current income exempt from regular federal income tax. Prior to the close of business on May 19, 2023, the Fund invested 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. As of the close of business on May 19, 2023, the Fund received its pro rata share of net assets from the Portfolio as part
of the termination of the Portfolio. As of May 20, 2023, the Fund invests its assets directly. 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 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.
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. In connection
with Rule 2a-5 of the 1940 Act, the Trustees have designated the Fund’s investment adviser as its valuation designee. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued by the
investment adviser, as valuation designee, at fair value using methods that most fairly reflect 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 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. Prior to the close of business on May 19, 2023, the net investment income or loss consisted 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 its investments in municipal obligations, 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 January 31, 2024, 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.
23
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
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.
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 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.
I Capital
Transactions—To seek to protect the Portfolio (and, indirectly, other investors in the Portfolio)
against the costs of accommodating investor inflows and outflows, prior to December 24, 2023, the Portfolio imposed a fee (“Portfolio transaction fee”) on inflows and outflows by Portfolio investors. The Portfolio transaction fee was
sized to cover the estimated cost to the Portfolio of, in connection with issuing interests, converting the cash and/or other instruments it received 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 have varied over time, was limited to amounts that had been authorized by the Board of Trustees and determined by Eaton Vance Management (EVM) to be appropriate. The
maximum Portfolio transaction fee was 2% of the amount of net contributions or
withdrawals. The Portfolio transaction fee was recorded as a component of capital transactions on the Statements of Changes in Net Assets. Effective after
the close of business on December 23, 2022, the Portfolio transaction fee was discontinued.
withdrawals. The Portfolio transaction fee was recorded as a component of capital transactions on the Statements of Changes in Net Assets. Effective after
the close of business on December 23, 2022, the Portfolio transaction fee was discontinued.
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 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.
The tax character of distributions declared for the years ended
January 31, 2024 and January 31, 2023 was as follows:
| Year Ended January 31, | ||
| 2024 | 2023 | |
| Tax-exempt income | $18,981,186 | $14,786,419 |
| Ordinary income | $ 1,239,241 | $ 545,507 |
During the year ended January 31, 2024, accumulated loss was
increased by $24,202,487 and paid-in capital was increased by $24,202,487 due to the Fund's investment in the Portfolio. These reclassifications had no effect on the net assets or net asset value per share of the Fund.
24
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
As of
January 31, 2024, the components of distributable earnings (accumulated loss) on a tax basis were as follows:
| Undistributed tax-exempt income | $ 476,890 |
| Deferred capital losses | (59,555,231) |
| Net unrealized appreciation | 3,158,263 |
| Distributions payable | (243,524) |
| Accumulated loss | $(56,163,602) |
At January 31, 2024, the Fund, for
federal income tax purposes, had deferred capital losses of $59,555,231 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, 2024, $30,945,370 are short-term and $28,609,861 are long-term.
The cost and unrealized appreciation (depreciation) of
investments of the Fund at January 31, 2024, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $700,992,887 |
| Gross unrealized appreciation | $ 6,270,864 |
| Gross unrealized depreciation | (3,112,601) |
| Net unrealized appreciation | $ 3,158,263 |
3 Investment Adviser and Administration Fee and
Other Transactions with Affiliates
The investment adviser
and administration fee is earned by EVM, an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory and administrative services rendered to the Fund. The 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% |
Prior to the close of business on
May 19, 2023, when the Fund’s assets were invested in the Portfolio, the Fund was allocated its share of the Portfolio’s investment adviser fee. The Portfolio paid advisory fees to Boston Management and Research (BMR), an affiliate of
EVM, on the same fee schedule as that of the Fund as described above. For the year ended January 31, 2024, the Fund’s allocated portion of the investment adviser fee paid by the Portfolio amounted to $641,747 and the investment adviser and
administration fee paid by the Fund amounted to $1,536,516. For the year ended January 31, 2024, the Fund’s investment adviser and administration fee, including the investment adviser fee allocated from the Portfolio, was 0.32% of the
Fund’s average daily net assets. 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. Prior to the close of business on May 19, 2023, the Portfolio had delegated the investment
management of the Portfolio to Parametric and BMR paid Parametric a portion of its investment adviser fee for sub-advisory services provided to the Portfolio.
The Fund (and Portfolio prior to the close of business on May
19, 2023) 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 the Fund and investment adviser fee paid by the Portfolio prior to the close of business on May 19, 2023, is/was reduced
by an amount equal to its pro rata share of the
25
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
advisory and
administration fee paid by the Fund/Portfolio due to its investment in the Liquidity Fund. For the year ended January 31, 2024, the investment adviser and administration fee paid was reduced by $21,128 relating to the Fund’s investment
in the Liquidity Fund, and the investment adviser fee allocated from the Portfolio was reduced by $21,760 relating to the Portfolio's investment in the Liquidity 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 brokerage commissions, acquired fund fees and expenses of unaffiliated funds, 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, 2024. Pursuant to this agreement, EVM and
Parametric were allocated $225,965 in total of the Fund’s operating expenses for the year ended January 31, 2024.
EVM provides sub-transfer agency and related services to the
Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the year ended January 31, 2024, EVM earned $10,871 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 $2,926 as its portion of the sales charge on sales of Class A shares for the year ended January 31,
2024. The Fund was informed that 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 sales of Class A shares for the year ended January 31, 2024 in the amount
of $4,510. 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 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. Certain officers and Trustees of the Fund are officers of EVM.
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 year ended January 31, 2024 amounted to $154,569 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 year ended January 31, 2024, the Fund paid or accrued to EVD $124,588 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 year ended January 31, 2024 amounted to $41,529 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% CDSC if redeemed within 12 months 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 year ended January 31, 2024, the Fund was informed that EVD received
less than $100 and $121 of CDSCs paid by Class A and Class C shareholders, respectively.
6 Purchases and Sales of Investments
Purchases and sales of investments by the Portfolio, other than
short-term obligations and investments transferred to the Fund, for the period from February 1, 2023 through May 19, 2023 aggregated $125,762,994 and $39,126,617, respectively. Purchases and sales of investments by the Fund, other than short-term
obligations and investments transferred from the Portfolio, for the period from May 20, 2023 through January 31, 2024 aggregated $351,199,249 and $352,646,684, respectively.
Increases and decreases in the Fund’s investment in the
Portfolio for the period from February 1, 2023 through May 19, 2023 were $69,820,129 and $692,309,904, respectively. Included in decreases is $679,434,523, representing the Fund’s interest in the Portfolio as of the close of business on May
19, 2023, which was exchanged for the Fund’s pro rata share of net assets of the Portfolio on that date having the same fair value. The Fund’s cost of its investment in the Portfolio on such date of $681,327,986 was carried forward to
the net assets acquired from the Portfolio and no gain or loss was recognized on the exchange.
26
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
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, including direct exchanges
pursuant to share class conversions, were as follows:
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | ||||
| Shares | Amount | Shares | Amount | ||
| Class A | |||||
| Sales | 1,519,484 | $ 18,112,382 | 1,248,153 | $ 14,928,446 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 111,044 | 1,323,295 | 91,217 | 1,085,155 | |
| Redemptions | (2,216,184) | (26,678,716) | (2,662,574) | (31,676,043) | |
| Net decrease | (585,656) | $ (7,243,039) | (1,323,204) | $ (15,662,442) | |
| Class C | |||||
| Sales | 77,081 | $ 920,635 | 181,603 | $ 2,165,075 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 22,182 | 264,328 | 19,945 | 236,978 | |
| Redemptions | (663,494) | (7,860,608) | (946,397) | (11,268,463) | |
| Net decrease | (564,231) | $ (6,675,645) | (744,849) | $ (8,866,410) | |
| Class I | |||||
| Sales | 25,956,534 | $ 311,039,152 | 25,794,132 | $ 307,646,291 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 1,286,871 | 15,326,653 | 924,341 | 10,997,652 | |
| Redemptions | (19,931,882) | (235,405,458) | (46,888,880) | (556,287,736) | |
| Net increase (decrease) | 7,311,523 | $ 90,960,347 | (20,170,407) | $(237,643,793) | |
8 Line of Credit
The Fund participates with other portfolios and funds managed
by EVM and its affiliates in a $650 million unsecured revolving line of credit agreement with a group of banks, which is in effect through October 22, 2024. In connection with the renewal of the agreement on October 24, 2023, the borrowing limit was
decreased from $725 million. 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 2023, an arrangement fee of $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 had no borrowings or allocated fees pursuant to its line of credit during the year ended January 31, 2024.
27
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
9 Affiliated Investments
At January 31, 2024, the value of the Fund's investment in
funds that may be deemed to be affiliated was $36,302,705, which represents 5.1% of the Fund's net assets. Transactions in such investments by the Portfolio for the period from February 1, 2023 through May 19, 2023 and by the Fund for the period
from May 20, 2023 through January 31, 2024, were as follows:
| Name | Value,
beginning of period |
Purchases | Sales
proceeds |
Net
realized gain (loss)(1) |
Change
in unrealized appreciation (depreciation)(1) |
Value,
end of period |
Dividend
income(1) |
Shares,
end of period |
| Short-Term Investments | ||||||||
| Liquidity Fund | $55,719,647 | $397,006,964 | $(416,423,906) | $ — | $ — | $36,302,705 | $1,392,665 | 36,302,705 |
| (1) | Includes allocation from the Portfolio for the period that the Fund was investing in the Portfolio. |
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 January 31, 2024, the hierarchy of inputs used in valuing
the Fund's investments, which are carried at fair value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 667,731,104 | $ — | $ 667,731,104 |
| U.S. Treasury Obligations | — | 117,341 | — | 117,341 |
| Short-Term Investments | 36,302,705 | — | — | 36,302,705 |
| Total Investments | $ 36,302,705 | $ 667,848,445 | $ — | $704,151,150 |
28
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Report of Independent
Registered Public Accounting Firm
To the
Trustees of Eaton Vance Municipals Trust II and Shareholders of Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying statement of
assets and liabilities of Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund (the “Fund”) (one of the funds constituting Eaton Vance Municipals Trust II), including the portfolio of investments, as of January 31, 2024, the related
statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our
opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of January 31, 2024, and the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The
Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements and financial highlights. Our procedures included confirmation of securities owned as of January 31, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 20, 2024
Boston, Massachusetts
March 20, 2024
We have served as the auditor of one or
more Eaton Vance investment companies since 1959.
29
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Federal Tax
Information (Unaudited)
The
Form 1099-DIV you receive in February 2025 will show the tax status of all distributions paid to your account in calendar year 2024. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment
in the Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding the status of exempt-interest dividends.
Exempt-Interest Dividends. For
the fiscal year ended January 31, 2024, the Fund designates 93.87% of distributions from net investment income as an exempt-interest dividend.
30
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Management and
Organization
Fund
Management. The Trustees of Eaton Vance Municipals Trust II (the Trust) are responsible for the overall management and supervision of the Trust's affairs. The Board members and officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Board members hold indefinite terms of office. Each Trustee holds office until his or her successor is elected and
qualified, subject to a prior death, resignation, retirement, disqualification or removal. Under the terms of the Fund's current Trustee retirement policy, an Independent Trustee must retire and resign as a Trustee on the earlier of: (i) the first
day of July following his or her 74th birthday; or (ii), with limited exception, December 31st of the 20th year in which he or she has served as a Trustee. However, if such retirement and resignation would cause the Fund to be out of compliance with
Section 16 of the 1940 Act or any other regulations or guidance of the SEC, then such retirement and resignation will not become effective until such time as action has been taken for the Fund to be in compliance therewith. The “noninterested
Trustees” consist of those Trustees who are not “interested persons” of the Trust, as that term is defined under the 1940 Act. The business address of each Board member and officer is One Post Office Square, Boston, Massachusetts
02109. As used below, “BMR” refers to Boston Management and Research, “EV” refers to EV LLC, “EVM” refers to Eaton Vance Management, “MSIM” refers to Morgan Stanley Investment Management
Inc. and “EVD” refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. Each of EVM, BMR, EVD and EV are indirect, wholly owned subsidiaries of Morgan Stanley. Each officer affiliated with EVM may hold a
position with other EVM affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 127 funds in the Eaton Vance fund complex (including both funds and portfolios in a hub and spoke structure).
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Interested Trustee | |||
| Anchal
Pachnanda(1) 1980 |
Trustee | Since 2023 | Co-Head of
Strategy of MSIM (since 2019). Formerly, Head of Strategy of MSIM (2017-2019). Ms. Pachnanda is an interested person because of her position with MSIM, which is an affiliate of the Trust. Other Directorships. None. |
| Noninterested Trustees | |||
| Alan
C. Bowser 1962 |
Trustee | Since 2022 | Private investor.
Formerly, Chief Diversity Officer, Partner and a member of the Operating Committee, and formerly served as Senior Advisor on Diversity and Inclusion for the firm’s chief executive officer, Co-Head of the Americas Region, and Senior Client
Advisor of Bridgewater Associates, an asset management firm (2011- 2023). Other Directorships. Independent Director of Stout Risius Ross (a middle market professional services advisory firm) (since 2021). |
| Mark
R. Fetting 1954 |
Trustee | Since 2016 | Private investor.
Formerly held various positions at Legg Mason, Inc. (investment management firm) (2000-2012), including President, Chief Executive Officer, Director and Chairman (2008-2012), Senior Executive Vice President (2004-2008) and Executive Vice President
(2001-2004). Formerly, President of Legg Mason family of funds (2001-2008). Formerly, Division President and Senior Officer of Prudential Financial Group, Inc. and related companies (investment management firm) (1991-2000). Other Directorships. None. |
| Cynthia
E. Frost 1961 |
Trustee | Since 2014 | Private investor.
Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012). Formerly, Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000). Formerly, Managing Director, Cambridge Associates
(investment consulting company) (1989-1995). Formerly, Consultant, Bain and Company (management consulting firm) (1987-1989). Formerly, Senior Equity Analyst, BA Investment Management Company (1983-1985). Other Directorships. None. |
| George
J. Gorman 1952 |
Chairperson
of the Board and Trustee |
Since
2021 (Chairperson) and 2014 (Trustee) |
Principal
at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (a registered public accounting firm) (1974-2009). Other Directorships. None. |
31
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Noninterested Trustees (continued) | |||
| Valerie
A. Mosley 1960 |
Trustee | Since 2014 | Chairwoman
and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Founder of Upward Wealth, Inc., dba BrightUp, a fintech platform. Formerly, Partner and Senior Vice President, Portfolio Manager and Investment Strategist at
Wellington Management Company, LLP (investment management firm) (1992-2012). Formerly, Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990). Other Directorships. Director of DraftKings, Inc. (digital sports entertainment and gaming company) (since September 2020). Director of Envestnet, Inc. (provider of intelligent systems for wealth management and financial wellness) (since 2018). Formerly, Director of Dynex Capital, Inc. (mortgage REIT) (2013-2020) and Director of Groupon, Inc. (e-commerce provider) (2020-2022). |
| Keith
Quinton 1958 |
Trustee | Since 2018 | Private investor,
researcher and lecturer. Formerly, Independent Investment Committee Member at New Hampshire Retirement System (2017-2021). Formerly, Portfolio Manager and Senior Quantitative Analyst at Fidelity Investments (investment management firm)
(2001-2014). Other Directorships. Formerly, Director (2016-2021) and Chairman (2019-2021) of New Hampshire Municipal Bond Bank. |
| Marcus
L. Smith 1966 |
Trustee | Since 2018 | Private investor
and independent corporate director. Formerly, Chief Investment Officer, Canada (2012-2017), Chief Investment Officer, Asia (2010-2012), Director of Asian Research (2004-2010) and portfolio manager (2001-2017) at MFS Investment Management
(investment management firm). Other Directorships. Director of First Industrial Realty Trust, Inc. (an industrial REIT) (since 2021). Director of MSCI Inc. (global provider of investment decision support tools) (since 2017). Formerly, Director of DCT Industrial Trust Inc. (logistics real estate company) (2017-2018). |
| Susan
J. Sutherland 1957 |
Trustee | Since 2015 | Private investor.
Director of Ascot Group Limited and certain of its subsidiaries (insurance and reinsurance) (since 2017). Formerly, Director of Hagerty Holding Corp. (insurance) (2015-2018) and Montpelier Re Holdings Ltd. (insurance and reinsurance) (2013-2015).
Formerly, Associate, Counsel and Partner at Skadden, Arps, Slate, Meagher & Flom LLP (law firm) (1982-2013). Other Directorships. Formerly, Director of Kairos Acquisition Corp. (insurance/InsurTech acquisition company) (2021-2023). |
| Scott
E. Wennerholm 1959 |
Trustee | Since 2016 | Private investor.
Formerly, Trustee at Wheelock College (postsecondary institution) (2012-2018). Formerly, Consultant at GF Parish Group (executive recruiting firm) (2016-2017). Formerly, Chief Operating Officer and Executive Vice President at BNY Mellon Asset
Management (investment management firm) (2005-2011). Formerly, Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm) (1997-2004). Formerly, Vice President at Fidelity Investments
Institutional Services (investment management firm) (1994-1997). Other Directorships. None. |
| Nancy
A. Wiser 1967 |
Trustee | Since 2022 | Formerly,
Executive Vice President and the Global Head of Operations at Wells Fargo Asset Management (2011-2021). Other Directorships. None. |
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees | |||
| Kenneth
A. Topping 1966 |
President | Since 2023 | Vice President and Chief Administrative Officer of EVM and BMR and Chief Operating Officer for Public Markets at MSIM. Also Vice President of Calvert Research and Management (“CRM”) since 2021. Formerly, Chief Operating Officer for Goldman Sachs Asset Management ‘Classic’ (2009-2020). |
| Deidre
E. Walsh 1971 |
Vice
President and Chief Legal Officer |
Since 2009 | Vice President of EVM and BMR. Also Vice President of CRM. |
| James
F. Kirchner 1967 |
Treasurer | Since 2007 | Vice President of EVM and BMR. Also Vice President of CRM. |
32
Parametric
TABS 5-to-15 Year Laddered Municipal Bond Fund
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees (continued) | |||
| Nicholas
S. Di Lorenzo 1987 |
Secretary | Since 2022 | Formerly, associate (2012-2021) and counsel (2022) at Dechert LLP. |
| Laura
T. Donovan 1976 |
Chief Compliance Officer | Since 2024 | Vice President of EVM and BMR. |
(1) Ms. Pachnanda began serving as Trustee effective April 1, 2023.
The SAI for the Fund includes additional information about the
Trustees and officers of the Fund and can be obtained without charge on Eaton Vance’s website at www.eatonvance.com or by calling 1-800-260-0761.
33
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 |
34
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. | |
35
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.
Tailored Shareholder Reports. Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging
streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of
charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Eaton
Vance Funds.
36
*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 1-to-10 Year Laddered Municipal Bond Fund
Annual Report
January 31, 2024
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.
Annual Report January 31, 2024
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Management’s Discussion of Fund Performance†
Economic and Market Conditions
For municipal bond investors, the 12-month period ended January
31, 2024, may be described as a roller-coaster ride driven by changing expectations of how long the U.S. Federal Reserve (the Fed) might keep raising the federal funds rate to tame inflation, and how high rates might go.
As the period opened in February 2023, a months-long municipal
bond rally stalled as robust economic reports led investors to fear the Fed might keep rates higher for longer than previously expected.
In March 2023, however, municipal bond performance turned
positive following the failure of two regional U.S. banks that triggered a “flight to quality” that, in turn, lifted municipal bonds to their strongest March performance since 2008 -- despite the Fed raising rates for a ninth consecutive
time that month.
In April 2023, the municipal bond market
began another sell-off. Although positive technical factors -- particularly municipal bond demand that exceeded supply -- produced brief periods of positive performance, the Fed’s tenth and eleventh rate hikes in a little over a year -- in May
and July 2023 -- caused municipal yields to rise and bond prices to fall.
From August through October 2023, above-average supply -- plus
an end-of-summer slowdown in coupon reinvestment -- reduced demand for municipal bonds even more. Although the Fed left interest rates unchanged in September 2023, investors interpreted the message to be that rates might stay higher for longer than
expected just weeks earlier -- adding fuel to the municipal bond sell-off.
In November and December 2023, the municipal bond market
reversed course. After several consecutive months of negative returns and rising rates, federal tax-free municipal yields approached their 2022 highs, giving investors a compelling reason to buy municipal bonds.
Typical calendar year-end technical factors -- particularly
constrained supplies and increased demand -- were additional tailwinds for municipal bond prices. Falling inflation and easing employment gains also led many investors to believe the Fed was done raising rates. As a result, the Bloomberg Municipal
Bond Index (the Municipal Index) returned 6.35% in November 2023, its best monthly performance since 1982.
In December 2023, the Municipal Index posted another solid
monthly gain as investors began to conclude the Fed might actually begin lowering interest rates as early as March 2024. In the final month of the period, however, municipal returns turned negative as municipal bonds -- following a strong year-end
rally -- appeared overvalued relative to U.S. Treasurys. Strong U.S. economic reports led investors to push expectations of a potential rate cut out to mid-2024, weighing on municipal returns during the period.
For the period as a whole, the Municipal Index returned
2.90%. Yields rose and prices fell across the municipal bond yield curve. Municipal bonds outperformed U.S. Treasurys in the middle- and long-maturity areas of the curve, but underperformed Treasurys in the short-maturity portion of the yield curve.
During the period, lower-rated bonds generally outperformed higher-rated bonds, while longer-maturity bonds outperformed shorter-maturity bonds.
Fund Performance
For the 12-month period ended January 31, 2024, Parametric TABS
1-to-10 Year Laddered Municipal Bond Fund (the Fund) returned 2.15% for Class A shares at net asset value (NAV), outperforming its benchmark, the Bloomberg Short-Intermediate 1-10 Year Municipal Bond Index (the Index), which returned 2.10%.
The Index is unmanaged, and returns do not reflect applicable
sales charges, commissions, or expenses.
The Fund seeks
to invest primarily in general obligation bonds and revenue bonds. The Fund seeks to weigh investments so that at least 5% -- and not more than 15% -- of its net assets are invested in obligations with a final maturity in a year within the 1-to-10
year maturity range. The Fund’s objective is to provide current income exempt from regular federal income tax. The investment sub-adviser’s process for selecting obligations for purchase and sale emphasizes the creditworthiness of the
issuer or other persons obligated to repay the obligation, and the relative value of the obligation in the market.
Relative-value trading -- a strategy that seeks to take
advantage of price and rate differences among similar securities -- contributed to Fund performance relative to the Index during the period.
Yield-curve positioning -- largely determined by the
Fund’s equal-weighted laddered structure -- also contributed to Fund performance versus the Index. During a period when municipal bonds in the so-called “belly” of the yield curve -- that is, bonds with 9-12 years remaining to
maturity -- outperformed bonds in other areas of the curve, the Fund held overweight positions in 9-12 year municipal bonds.
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
January 31, 2024
Management’s
Discussion of Fund Performance† — continued
Duration management contributed to Index-relative returns as
well. During the period, the Fund maintained a longer duration than that of the Index. The Fund further increased its duration in June 2023. While this proved to be somewhat premature and detracted from Index-relative returns as municipal interest
rates rose through October 2023, the longer duration positioning helped the Fund’s relative performance when municipal bonds rallied in November and December. For the period as a whole, duration positioning was a net contributor to performance
versus the Index.
In contrast, credit-quality allocations
detracted from Fund returns relative to the Index. The Fund held an overweight position in high quality AAA-rated bonds during a period when higher-quality securities generally underperformed lower-quality securities.
An overweight position in the housing sector also detracted
from Index-relative performance, as the housing sector -- generally valued for its relatively high income potential compared to other sectors -- underperformed the Index during the period.
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.
3
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
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 |
One Year | Five Years | Since
Inception |
| Class A at NAV | 05/04/2015 | 05/04/2015 | 2.15% | 1.83% | 1.86% |
| Class A with 3.25% Maximum Sales Charge | — | — | (1.19) | 1.17 | 1.47 |
| Class C at NAV | 05/04/2015 | 05/04/2015 | 1.39 | 1.07 | 1.17 |
| Class C with 1% Maximum Deferred Sales Charge | — | — | 0.39 | 1.07 | 1.17 |
| Class I at NAV | 05/04/2015 | 05/04/2015 | 2.40 | 2.08 | 2.12 |
|
| |||||
| Bloomberg Short-Intermediate 1-10 Year Municipal Bond Index | — | — | 2.10% | 1.59% | 1.72% |
| % Total Annual Operating Expense Ratios3 | Class A | Class C | Class I |
| Gross | 0.80% | 1.55% | 0.55% |
| Net | 0.65 | 1.40 | 0.40 |
| % Distribution Rates/Yields4 | Class A | Class C | Class I |
| Distribution Rate | 2.76% | 2.00% | 3.01% |
| SEC 30-day Yield – Subsidized | 2.66 | 1.99 | 3.00 |
| SEC 30-day Yield – Unsubsidized | 2.45 | 1.79 | 2.78 |
Growth of $10,000
This graph shows the change in value of a hypothetical
investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
| Growth of Investment | Amount Invested | Period Beginning | At NAV | With Maximum Sales Charge |
| Class C | $10,000 | 05/04/2015 | $11,069 | N.A. |
| Class I, at minimum investment | $1,000,000 | 05/04/2015 | $1,201,908 | N.A. |
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 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Fund Profile
| Credit Quality (% of total investments)1 |
Footnotes:
| 1 | 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 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Endnotes and
Additional Disclosures
6
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Fund Expenses
Example
As a Fund shareholder, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchases; 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 (August 1, 2023
to January 31, 2024).
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). 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 (8/1/23) |
Ending
Account Value (1/31/24) |
Expenses
Paid During Period* (8/1/23 – 1/31/24) |
Annualized
Expense Ratio | |
| Actual | ||||
| Class A | $1,000.00 | $1,025.10 | $3.32** | 0.65% |
| Class C | $1,000.00 | $1,021.20 | $7.13** | 1.40% |
| Class I | $1,000.00 | $1,026.40 | $1.99** | 0.39% |
| Hypothetical | ||||
| (5% return per year before expenses) | ||||
| Class A | $1,000.00 | $1,021.93 | $3.31** | 0.65% |
| Class C | $1,000.00 | $1,018.15 | $7.12** | 1.40% |
| Class I | $1,000.00 | $1,023.24 | $1.99** | 0.39% |
| * | 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 184/365 (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 July 31, 2023. |
| ** | Absent an allocation of certain expenses to affiliate(s), expenses would be higher. |
7
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments
8
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
9
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Portfolio of
Investments — continued
10
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Statement of Assets
and Liabilities
| January 31, 2024 | |
| Assets | |
| Unaffiliated investments, at value (identified cost $71,254,461) | $ 72,002,198 |
| Affiliated investments, at value (identified cost $4,512,016) | 4,512,016 |
| Cash | 511,528 |
| Interest receivable | 508,770 |
| Dividends receivable from affiliated investments | 20,954 |
| Receivable for Fund shares sold | 75,523 |
| Trustees' deferred compensation plan | 14,749 |
| Total assets | $77,645,738 |
| Liabilities | |
| Payable for when-issued securities | $ 3,464,227 |
| Payable for Fund shares redeemed | 102,952 |
| Payable to affiliates: | |
| Investment adviser and administration fee | 19,406 |
| Distribution and service fees | 3,849 |
| Trustees' deferred compensation plan | 14,749 |
| Other | 11,567 |
| Accrued expenses | 71,844 |
| Total liabilities | $ 3,688,594 |
| Net Assets | $73,957,144 |
| Sources of Net Assets | |
| Paid-in capital | $ 76,076,850 |
| Accumulated loss | (2,119,706) |
| Net Assets | $73,957,144 |
| Class A Shares | |
| Net Assets | $ 7,361,871 |
| Shares Outstanding | 714,717 |
| Net
Asset Value and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.30 |
| Maximum
Offering Price Per Share (100 ÷ 96.75 of net asset value per share) |
$ 10.65 |
| Class C Shares | |
| Net Assets | $ 2,627,869 |
| Shares Outstanding | 255,124 |
| Net
Asset Value and Offering Price Per Share* (net assets ÷ shares of beneficial interest outstanding) |
$ 10.30 |
| Class I Shares | |
| Net Assets | $ 63,967,404 |
| Shares Outstanding | 6,203,696 |
| Net
Asset Value, Offering Price and Redemption Price Per Share (net assets ÷ shares of beneficial interest outstanding) |
$ 10.31 |
| 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. |
11
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Statement of
Operations
| Year Ended | |
| January 31, 2024 | |
| Investment Income | |
| Dividend income from affiliated investments | $ 202,976 |
| Interest income | 2,545,402 |
| Total investment income | $2,748,378 |
| Expenses | |
| Investment adviser and administration fee | $ 242,676 |
| Distribution and service fees: | |
| Class A | 21,269 |
| Class C | 29,957 |
| Trustees’ fees and expenses | 5,328 |
| Custodian fee | 26,739 |
| Transfer and dividend disbursing agent fees | 31,287 |
| Legal and accounting services | 40,858 |
| Printing and postage | 7,456 |
| Registration fees | 55,888 |
| Miscellaneous | 13,108 |
| Total expenses | $ 474,566 |
| Deduct: | |
| Waiver and/or reimbursement of expenses by affiliates | $ 126,114 |
| Total expense reductions | $ 126,114 |
| Net expenses | $ 348,452 |
| Net investment income | $2,399,926 |
| Realized and Unrealized Gain (Loss) | |
| Net realized gain (loss): | |
| Investment transactions | $ (592,196) |
| Net realized loss | $ (592,196) |
| Change in unrealized appreciation (depreciation): | |
| Investments | $ (234,194) |
| Net change in unrealized appreciation (depreciation) | $ (234,194) |
| Net realized and unrealized loss | $ (826,390) |
| Net increase in net assets from operations | $1,573,536 |
12
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Statements of Changes
in Net Assets
| Year Ended January 31, | ||
| 2024 | 2023 | |
| Increase (Decrease) in Net Assets | ||
| From operations: | ||
| Net investment income | $ 2,399,926 | $ 1,500,697 |
| Net realized loss | (592,196) | (2,441,229) |
| Net change in unrealized appreciation (depreciation) | (234,194) | (225,244) |
| Net increase (decrease) in net assets from operations | $ 1,573,536 | $ (1,165,776) |
| Distributions to shareholders: | ||
| Class A | $ (238,475) | $ (178,045) |
| Class C | (61,531) | (30,862) |
| Class I | (1,963,426) | (1,334,584) |
| Total distributions to shareholders | $ (2,263,432) | $ (1,543,491) |
| Transactions in shares of beneficial interest: | ||
| Class A | $ (1,553,313) | $ (5,085,490) |
| Class C | (538,303) | (309,226) |
| Class I | 3,260,776 | (12,082,234) |
| Net increase (decrease) in net assets from Fund share transactions | $ 1,169,160 | $(17,476,950) |
| Net increase (decrease) in net assets | $ 479,264 | $(20,186,217) |
| Net Assets | ||
| At beginning of year | $ 73,477,880 | $ 93,664,097 |
| At end of year | $73,957,144 | $ 73,477,880 |
13
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Financial
Highlights
| Class A | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 10.37 | $ 10.59 | $ 10.91 | $ 10.60 | $ 10.24 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.29 | $ 0.17 | $ 0.10 | $ 0.13 | $ 0.17 |
| Net realized and unrealized gain (loss) | (0.07) | (0.21) | (0.30) | 0.31 | 0.36 |
| Total income (loss) from operations | $ 0.22 | $ (0.04) | $ (0.20) | $ 0.44 | $ 0.53 |
| Less Distributions | |||||
| From net investment income | $ (0.29) | $ (0.17) | $ (0.10) | $ (0.13) | $ (0.17) |
| From net realized gain | — | (0.01) | (0.02) | — | — |
| Total distributions | $ (0.29) | $ (0.18) | $ (0.12) | $ (0.13) | $ (0.17) |
| Net asset value — End of year | $10.30 | $10.37 | $ 10.59 | $ 10.91 | $ 10.60 |
| Total Return(1) | 2.15% | (0.37)% | (1.87)% | 4.19% | 5.23% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $ 7,362 | $ 9,006 | $14,526 | $22,853 | $19,901 |
| Ratios (as a percentage of average daily net assets):(2) | |||||
| Total expenses | 0.81% | 0.80% | 0.78% | 0.81% | 0.83% |
| Net expenses | 0.64% (3) | 0.64% (3) | 0.65% | 0.65% | 0.65% |
| Net investment income | 2.99% | 1.57% | 0.92% | 1.23% | 1.64% |
| Portfolio Turnover | 82% | 90% | 34% | 81% | 41% |
| (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) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | 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 0.01% of average daily net assets for the years ended January 31, 2024 and 2023). |
14
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Financial
Highlights — continued
| Class C | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 10.37 | $ 10.59 | $ 10.91 | $ 10.59 | $ 10.24 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.21 | $ 0.09 | $ 0.02 | $ 0.05 | $ 0.09 |
| Net realized and unrealized gain (loss) | (0.07) | (0.21) | (0.30) | 0.32 | 0.35 |
| Total income (loss) from operations | $ 0.14 | $ (0.12) | $ (0.28) | $ 0.37 | $ 0.44 |
| Less Distributions | |||||
| From net investment income | $ (0.21) | $ (0.09) | $ (0.02) | $ (0.05) | $ (0.09) |
| From net realized gain | — | (0.01) | (0.02) | — | — |
| Total distributions | $ (0.21) | $ (0.10) | $ (0.04) | $ (0.05) | $ (0.09) |
| Net asset value — End of year | $10.30 | $10.37 | $10.59 | $10.91 | $10.59 |
| Total Return(1) | 1.39% | (1.12)% | (2.60)% | 3.52% | 4.35% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $ 2,628 | $ 3,198 | $ 3,591 | $ 3,994 | $ 3,875 |
| Ratios (as a percentage of average daily net assets):(2) | |||||
| Total expenses | 1.56% | 1.55% | 1.53% | 1.56% | 1.58% |
| Net expenses | 1.39% (3) | 1.39% (3) | 1.40% | 1.40% | 1.40% |
| Net investment income | 2.24% | 0.89% | 0.17% | 0.48% | 0.90% |
| Portfolio Turnover | 82% | 90% | 34% | 81% | 41% |
| (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) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | 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 0.01% of average daily net assets for the years ended January 31, 2024 and 2023). |
15
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Financial
Highlights — continued
| Class I | |||||
| Year Ended January 31, | |||||
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Net asset value — Beginning of year | $ 10.38 | $ 10.60 | $ 10.92 | $ 10.61 | $ 10.25 |
| Income (Loss) From Operations | |||||
| Net investment income | $ 0.31 | $ 0.20 | $ 0.13 | $ 0.16 | $ 0.20 |
| Net realized and unrealized gain (loss) | (0.07) | (0.22) | (0.30) | 0.31 | 0.36 |
| Total income (loss) from operations | $ 0.24 | $ (0.02) | $ (0.17) | $ 0.47 | $ 0.56 |
| Less Distributions | |||||
| From net investment income | $ (0.31) | $ (0.19) | $ (0.13) | $ (0.16) | $ (0.20) |
| From net realized gain | — | (0.01) | (0.02) | — | — |
| Total distributions | $ (0.31) | $ (0.20) | $ (0.15) | $ (0.16) | $ (0.20) |
| Net asset value — End of year | $ 10.31 | $ 10.38 | $ 10.60 | $ 10.92 | $ 10.61 |
| Total Return(1) | 2.40% | (0.12)% | (1.62)% | 4.45% | 5.49% |
| Ratios/Supplemental Data | |||||
| Net assets, end of year (000’s omitted) | $63,967 | $61,275 | $75,548 | $66,298 | $47,792 |
| Ratios (as a percentage of average daily net assets):(2) | |||||
| Total expenses | 0.56% | 0.55% | 0.53% | 0.56% | 0.58% |
| Net expenses | 0.39% (3) | 0.39% (3) | 0.40% | 0.40% | 0.40% |
| Net investment income | 3.23% | 1.88% | 1.17% | 1.46% | 1.88% |
| Portfolio Turnover | 82% | 90% | 34% | 81% | 41% |
| (1) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
| (2) | Total expenses do not reflect amounts reimbursed and/or waived by the adviser and certain of its affiliates, if applicable. Net expenses are net of all reductions and represent the net expenses paid by the Fund. |
| (3) | 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 0.01% of average daily net assets for the years ended January 31, 2024 and 2023). |
16
See Notes to Financial Statements.
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements
1 Significant Accounting Policies
Parametric TABS 1-to-10 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's investment objective is to provide current income exempt from regular federal income tax. 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 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.
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. In
connection with Rule 2a-5 of the 1940 Act, the Trustees have designated the Fund’s investment adviser as its valuation designee. Investments for which valuations or market quotations are not readily available or are deemed unreliable are
valued by the investment adviser, as valuation designee, at fair value using methods that most fairly reflect 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 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—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 municipal obligations, 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 January 31, 2024, 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 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.
17
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — 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 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 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.
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 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.
The tax character of distributions declared for the years ended
January 31, 2024 and January 31, 2023 was as follows:
| Year Ended January 31, | ||
| 2024 | 2023 | |
| Tax-exempt income | $2,082,606 | $1,360,117 |
| Ordinary income | $ 180,826 | $ 152,565 |
| Long-term capital gains | $ — | $ 30,809 |
As of January 31, 2024, the components of distributable
earnings (accumulated loss) on a tax basis were as follows:
| Undistributed tax-exempt income | $ 15,978 |
| Deferred capital losses | (3,026,522) |
| Net unrealized appreciation | 890,838 |
| Accumulated loss | $(2,119,706) |
At January 31, 2024, the Fund, for
federal income tax purposes, had deferred capital losses of $3,026,522 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, 2024, $1,469,608 are short-term and $1,556,914 are long-term.
18
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
The
cost and unrealized appreciation (depreciation) of investments of the Fund at January 31, 2024, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $75,623,376 |
| Gross unrealized appreciation | $ 1,170,735 |
| Gross unrealized depreciation | (279,897) |
| Net unrealized appreciation | $ 890,838 |
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 fee is computed at an annual rate
as a percentage of 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 year ended January 31, 2024,
the investment adviser and administration fee amounted to $242,676 or 0.32% of the Fund's average daily net assets. 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.
The 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 the Fund is reduced by an amount equal to its pro rata share of the advisory and administration fee paid by the Fund due to its investment in the Liquidity Fund. For the year ended
January 31, 2024, the investment adviser and administration fee paid was reduced by $6,173 relating to the Fund’s investment in the Liquidity 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 brokerage commissions, acquired fund fees and expenses of unaffiliated funds, 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, 2024. Pursuant to this agreement, EVM and
Parametric were allocated $119,941 in total of the Fund's operating expenses for the year ended January 31, 2024.
EVM provides sub-transfer agency and related services to the
Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the year ended January 31, 2024, EVM earned $2,473 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 $2,727 as its portion of the sales charge on sales of Class A shares for the year ended January 31,
2024. EVD also received distribution and service fees from Class A and Class C shares (see Note 4).
Trustees and officers of the Fund who are members of
EVM’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. Certain officers and Trustees of the Fund are officers of EVM.
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 year ended January 31, 2024 amounted to $21,269 for Class A
shares.
19
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — 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 year ended January 31, 2024, the Fund paid or accrued to EVD $22,468 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 year ended January 31, 2024 amounted to $7,489 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% CDSC if redeemed within 12 months 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 year ended January 31, 2024, the Fund was informed that EVD received
no CDSCs paid by Class A or Class C shareholders.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term
obligations, aggregated $63,297,079 and $59,529,590, respectively, for the year ended January 31, 2024.
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, including direct exchanges
pursuant to share class conversions, were as follows:
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | ||||
| Shares | Amount | Shares | Amount | ||
| Class A | |||||
| Sales | 76,311 | $ 780,068 | 127,739 | $ 1,306,576 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 23,387 | 237,363 | 17,448 | 177,448 | |
| Redemptions | (253,620) | (2,570,744) | (648,240) | (6,569,514) | |
| Net decrease | (153,922) | $ (1,553,313) | (503,053) | $ (5,085,490) | |
| Class C | |||||
| Sales | 5,386 | $ 54,883 | 69,657 | $ 699,085 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 6,059 | 61,483 | 3,041 | 30,862 | |
| Redemptions | (64,743) | (654,669) | (103,349) | (1,039,173) | |
| Net decrease | (53,298) | $ (538,303) | (30,651) | $ (309,226) | |
20
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
| Year
Ended January 31, 2024 |
Year
Ended January 31, 2023 | ||||
| Shares | Amount | Shares | Amount | ||
| Class I | |||||
| Sales | 2,674,876 | $ 27,244,712 | 5,026,077 | $ 51,335,670 | |
| Issued to shareholders electing to receive payments of distributions in Fund shares | 193,284 | 1,963,280 | 131,048 | 1,333,361 | |
| Redemptions | (2,568,409) | (25,947,216) | (6,379,165) | (64,751,265) | |
| Net increase (decrease) | 299,751 | $ 3,260,776 | (1,222,040) | $(12,082,234) | |
8 Line of Credit
The Fund participates with other portfolios and funds managed
by EVM and its affiliates in a $650 million unsecured revolving line of credit agreement with a group of banks, which is in effect through October 22, 2024. In connection with the renewal of the agreement on October 24, 2023, the borrowing limit was
decreased from $725 million. 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 2023, an arrangement fee of $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 had no borrowings outstanding pursuant to its line of credit at January 31, 2024. The Fund did not have any significant borrowings or allocated fees during
the year ended January 31, 2024.
9
Affiliated Investments
At January 31, 2024, the value of
the Fund's investment in funds that may be deemed to be affiliated was $4,512,016, which represents 6.1% of the Fund's net assets. Transactions in such investments by the Fund for the year ended January 31, 2024 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 | $6,057,601 | $60,484,807 | $(62,030,392) | $ — | $ — | $4,512,016 | $202,976 | 4,512,016 |
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.
21
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Notes to Financial
Statements — continued
At
January 31, 2024, the hierarchy of inputs used in valuing the Fund's investments, which are carried at fair value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total |
| Tax-Exempt Municipal Obligations | $ — | $ 72,002,198 | $ — | $ 72,002,198 |
| Short-Term Investments | 4,512,016 | — | — | 4,512,016 |
| Total Investments | $ 4,512,016 | $ 72,002,198 | $ — | $76,514,214 |
22
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Report of Independent
Registered Public Accounting Firm
To the
Trustees of Eaton Vance Municipals Trust II and Shareholders of Parametric TABS 1-to-10 Year Laddered Municipal Bond Fund:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying statement of
assets and liabilities of Parametric TABS 1-to-10 Year Laddered Municipal Bond Fund (the “Fund”) (one of the funds constituting Eaton Vance Municipals Trust II), including the portfolio of investments, as of January 31, 2024, the related
statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our
opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of January 31, 2024, and the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The
Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements and financial highlights. Our procedures included confirmation of securities owned as of January 31, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 20, 2024
Boston, Massachusetts
March 20, 2024
We have served as the auditor of one or
more Eaton Vance investment companies since 1959.
23
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Federal Tax
Information (Unaudited)
The
Form 1099-DIV you receive in February 2025 will show the tax status of all distributions paid to your account in calendar year 2024. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their
investment in the Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding the status of exempt-interest dividends.
Exempt-Interest Dividends. For
the fiscal year ended January 31, 2024, the Fund designates 92.01% of distributions from net investment income as an exempt-interest dividend.
24
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Management and
Organization
Fund
Management. The Trustees of Eaton Vance Municipals Trust II (the Trust) are responsible for the overall management and supervision of the Trust's affairs. The Board members and officers of the Trust are listed
below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Board members hold indefinite terms of office. Each Trustee holds office until his or her successor is elected and
qualified, subject to a prior death, resignation, retirement, disqualification or removal. Under the terms of the Fund’s current Trustee retirement policy, an Independent Trustee must retire and resign as a Trustee on the earlier of: (i) the
first day of July following his or her 74th birthday; or (ii), with limited exception, December 31st of the 20th year in which he or she has served as a Trustee. However, if such retirement and resignation would cause the Fund to be out of
compliance with Section 16 of the 1940 Act or any other regulations or guidance of the SEC, then such retirement and resignation will not become effective until such time as action has been taken for the Fund to be in compliance therewith. The
“noninterested Trustees” consist of those Trustees who are not “interested persons” of the Trust, as that term is defined under the 1940 Act. The business address of each Board member and officer is One Post Office Square,
Boston, Massachusetts 02109. As used below, “BMR” refers to Boston Management and Research, “EV” refers to EV LLC, “EVM” refers to Eaton Vance Management, “MSIM” refers to Morgan Stanley Investment
Management Inc. and “EVD” refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. Each of EVM, BMR, EVD and EV are indirect, wholly owned subsidiaries of Morgan Stanley. Each officer affiliated with EVM may
hold a position with other EVM affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 127 funds in the Eaton Vance fund complex (including both funds and portfolios in a hub and spoke
structure).
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Interested Trustee | |||
| Anchal
Pachnanda(1) 1980 |
Trustee | Since 2023 | Co-Head of
Strategy of MSIM (since 2019). Formerly, Head of Strategy of MSIM (2017-2019). Ms. Pachnanda is an interested person because of her position with MSIM, which is an affiliate of the Trust. Other Directorships. None. |
| Noninterested Trustees | |||
| Alan
C. Bowser 1962 |
Trustee | Since 2022 | Private investor.
Formerly, Chief Diversity Officer, Partner and a member of the Operating Committee, and formerly served as Senior Advisor on Diversity and Inclusion for the firm’s chief executive officer, Co-Head of the Americas Region, and Senior Client
Advisor of Bridgewater Associates, an asset management firm (2011- 2023). Other Directorships. Independent Director of Stout Risius Ross (a middle market professional services advisory firm) (since 2021). |
| Mark
R. Fetting 1954 |
Trustee | Since 2016 | Private investor.
Formerly held various positions at Legg Mason, Inc. (investment management firm) (2000-2012), including President, Chief Executive Officer, Director and Chairman (2008-2012), Senior Executive Vice President (2004-2008) and Executive Vice President
(2001-2004). Formerly, President of Legg Mason family of funds (2001-2008). Formerly, Division President and Senior Officer of Prudential Financial Group, Inc. and related companies (investment management firm) (1991-2000). Other Directorships. None. |
| Cynthia
E. Frost 1961 |
Trustee | Since 2014 | Private investor.
Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012). Formerly, Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000). Formerly, Managing Director, Cambridge Associates
(investment consulting company) (1989-1995). Formerly, Consultant, Bain and Company (management consulting firm) (1987-1989). Formerly, Senior Equity Analyst, BA Investment Management Company (1983-1985). Other Directorships. None. |
| George
J. Gorman 1952 |
Chairperson
of the Board and Trustee |
Since
2021 (Chairperson) and 2014 (Trustee) |
Principal
at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (a registered public accounting firm) (1974-2009). Other Directorships. None. |
25
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
| Noninterested Trustees (continued) | |||
| Valerie
A. Mosley 1960 |
Trustee | Since 2014 | Chairwoman
and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Founder of Upward Wealth, Inc., dba BrightUp, a fintech platform. Formerly, Partner and Senior Vice President, Portfolio Manager and Investment Strategist at
Wellington Management Company, LLP (investment management firm) (1992-2012). Formerly, Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990). Other Directorships. Director of DraftKings, Inc. (digital sports entertainment and gaming company) (since September 2020). Director of Envestnet, Inc. (provider of intelligent systems for wealth management and financial wellness) (since 2018). Formerly, Director of Dynex Capital, Inc. (mortgage REIT) (2013-2020) and Director of Groupon, Inc. (e-commerce provider) (2020-2022). |
| Keith
Quinton 1958 |
Trustee | Since 2018 | Private investor,
researcher and lecturer. Formerly, Independent Investment Committee Member at New Hampshire Retirement System (2017-2021). Formerly, Portfolio Manager and Senior Quantitative Analyst at Fidelity Investments (investment management firm)
(2001-2014). Other Directorships. Formerly, Director (2016-2021) and Chairman (2019-2021) of New Hampshire Municipal Bond Bank. |
| Marcus
L. Smith 1966 |
Trustee | Since 2018 | Private investor
and independent corporate director. Formerly, Chief Investment Officer, Canada (2012-2017), Chief Investment Officer, Asia (2010-2012), Director of Asian Research (2004-2010) and portfolio manager (2001-2017) at MFS Investment Management
(investment management firm). Other Directorships. Director of First Industrial Realty Trust, Inc. (an industrial REIT) (since 2021). Director of MSCI Inc. (global provider of investment decision support tools) (since 2017). Formerly, Director of DCT Industrial Trust Inc. (logistics real estate company) (2017-2018). |
| Susan
J. Sutherland 1957 |
Trustee | Since 2015 | Private investor.
Director of Ascot Group Limited and certain of its subsidiaries (insurance and reinsurance) (since 2017). Formerly, Director of Hagerty Holding Corp. (insurance) (2015-2018) and Montpelier Re Holdings Ltd. (insurance and reinsurance) (2013-2015).
Formerly, Associate, Counsel and Partner at Skadden, Arps, Slate, Meagher & Flom LLP (law firm) (1982-2013). Other Directorships. Formerly, Director of Kairos Acquisition Corp. (insurance/InsurTech acquisition company) (2021-2023). |
| Scott
E. Wennerholm 1959 |
Trustee | Since 2016 | Private investor.
Formerly, Trustee at Wheelock College (postsecondary institution) (2012-2018). Formerly, Consultant at GF Parish Group (executive recruiting firm) (2016-2017). Formerly, Chief Operating Officer and Executive Vice President at BNY Mellon Asset
Management (investment management firm) (2005-2011). Formerly, Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm) (1997-2004). Formerly, Vice President at Fidelity Investments
Institutional Services (investment management firm) (1994-1997). Other Directorships. None. |
| Nancy
A. Wiser 1967 |
Trustee | Since 2022 | Formerly,
Executive Vice President and the Global Head of Operations at Wells Fargo Asset Management (2011-2021). Other Directorships. None. |
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees | |||
| Kenneth
A. Topping 1966 |
President | Since 2023 | Vice President and Chief Administrative Officer of EVM and BMR and Chief Operating Officer for Public Markets at MSIM. Also Vice President of Calvert Research and Management (“CRM”) since 2021. Formerly, Chief Operating Officer for Goldman Sachs Asset Management ‘Classic’ (2009-2020). |
| Deidre
E. Walsh 1971 |
Vice
President and Chief Legal Officer |
Since 2009 | Vice President of EVM and BMR. Also Vice President of CRM. |
| James
F. Kirchner 1967 |
Treasurer | Since 2007 | Vice President of EVM and BMR. Also Vice President of CRM. |
26
Parametric
TABS 1-to-10 Year Laddered Municipal Bond Fund
January 31, 2024
Management and
Organization — continued
| Name and Year of Birth | Trust
Position(s) |
Length of Service | Principal
Occupation(s) During Past Five Years |
| Principal Officers who are not Trustees (continued) | |||
| Nicholas
S. Di Lorenzo 1987 |
Secretary | Since 2022 | Formerly, associate (2012-2021) and counsel (2022) at Dechert LLP. |
| Laura
T. Donovan 1976 |
Chief
Compliance Officer |
Since 2024 | Vice President of EVM and BMR. |
(1) Ms. Pachnanda began serving as Trustee effective April 1, 2023.
The SAI for the Fund includes additional information about the
Trustees and officers of the Fund and can be obtained without charge on Eaton Vance’s website at www.eatonvance.com or by calling 1-800-260-0761.
27
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 |
28
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. | |
29
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.
Tailored Shareholder Reports. Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging
streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of
charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Eaton
Vance Funds.
30
* 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
The registrant (sometimes referred to as the “Fund”) has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122. The registrant has not amended the code of ethics as described in Form N-CSR during the period covered by this report. The registrant has not granted any waiver, including an implicit waiver, from a provision of the code of ethics as described in Form N-CSR during the period covered by this report.
Item 3. Audit Committee Financial Expert
The registrant’s Board of Trustees (the “Board”) has designated George J. Gorman and Scott E. Wennerholm, each an independent trustee, as audit committee financial experts. Mr. Gorman is a certified public accountant who is the Principal at George J. Gorman LLC (a consulting firm). Previously, Mr. Gorman served in various capacities at Ernst & Young LLP (a registered public accounting firm), including as Senior Partner. Mr. Gorman also has experience serving as an independent trustee and audit committee financial expert of other mutual fund complexes. Mr. Wennerholm is a private investor. Previously, Mr. Wennerholm served as a
Trustee at Wheelock College (postsecondary institution), as a Consultant at GF Parish Group (executive recruiting firm), Chief Operating Officer and Executive Vice President at BNY Mellon Asset Management (investment management firm), Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm), and Vice President at Fidelity Investments Institutional Services (investment management firm).
Item 4. Principal Accountant Fees and Services
Eaton Vance High Yield Municipal Income Fund, Parametric TABS Intermediate-Term Municipal Bond Fund, Parametric TABS Short-Term Municipal Bond Fund, Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund and Parametric TABS 1-to-10 Year Laddered Municipal Bond Fund (the “Fund(s)”) are series of Eaton Vance Municipals Trust II (the “Trust”), a Massachusetts business trust, which, including the Funds, contains a total of 5 series (the “Series”). The Trust is registered under the Investment Company Act of 1940 as an open-end management investment company. This Form N-CSR relates to the Funds’ annual reports.
(a)-(d)
The following tables present the aggregate fees billed to each Fund for the Fund’s fiscal years ended January 31, 2023 and January 31, 2024 by the registrant’s principal accountant, Deloitte & Touche LLP (“D&T”), for professional services rendered for the audit of the Fund’s annual financial statements and fees billed for other services rendered by D&T during such periods.
Eaton Vance High Yield Municipal Income Fund
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Audit Fees |
$ | 86,050 | $ | 86,500 | ||||
| Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
| Tax Fees(2) |
$ | 0 | $ | 0 | ||||
| All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
| Total |
$ | 86,050 | $ | 86,500 | ||||
|
|
|
|
|
|||||
Parametric TABS Intermediate-Term Municipal Bond Fund
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Audit Fees |
$ | 45,250 | $ | 45,700 | ||||
| Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
| Tax Fees(2) |
$ | 1,825 | $ | 0 | ||||
| All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
| Total |
$ | 47,075 | $ | 45,700 | ||||
|
|
|
|
|
|||||
Parametric TABS 5-to-15 Year Laddered Municipal Bond Fund
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Audit Fees |
$ | 17,650 | $ | 50,500 | ||||
| Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
| Tax Fees(2) |
$ | 0 | $ | 0 | ||||
| All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
| Total |
$ | 17,650 | $ | 50,500 | ||||
|
|
|
|
|
|||||
Parametric TABS Short-Term Municipal Bond Fund
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Audit Fees |
$ | 44,950 | $ | 45,400 | ||||
| Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
| Tax Fees(2) |
$ | 1,825 | $ | 0 | ||||
| All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
| Total |
$ | 46,775 | $ | 45,400 | ||||
|
|
|
|
|
|||||
Parametric TABS 1-to-10 Year Laddered Municipal Bond Fund
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Audit Fees |
$ | 34,750 | $ | 35,200 | ||||
| Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
| Tax Fees(2) |
$ | 2,175 | $ | 0 | ||||
| All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
| Total |
$ | 36,925 | $ | 35,200 | ||||
|
|
|
|
|
|||||
| (1) | Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of financial statements and are not reported under the category of audit fees. |
| (2) | Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation and other related tax compliance/planning matters. |
| (3) | All other fees consist of the aggregate fees billed for products and services provided by the principal accountant other than audit, audit-related, and tax services. |
The Funds comprised all of the Series of the Trust at January 31, 2024, and have the same fiscal year end (January 31). The following table presents the aggregate audit, audit-related, tax, and other fees billed to all of the Series in the Trust by D&T for the last two fiscal years of each Series.
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Audit Fees |
$ | 228,650 | $ | 263,300 | ||||
| Audit-Related Fees(1) |
$ | 0 | $ | 0 | ||||
| Tax Fees(2) |
$ | 5,825 | $ | 0 | ||||
| All Other Fees(3) |
$ | 0 | $ | 0 | ||||
|
|
|
|
|
|||||
| Total |
$ | 234,475 | $ | 263,300 | ||||
|
|
|
|
|
|||||
| (1) | Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of financial statements and are not reported under the category of audit fees. |
| (2) | Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation and other related tax compliance/planning matters. |
| (3) | All other fees consist of the aggregate fees billed for products and services provided by the principal accountant other than audit, audit-related, and tax services. |
(e)(1) The registrant’s audit committee has adopted policies and procedures relating to the pre-approval of services provided by the registrant’s principal accountant (the “Pre-Approval Policies”). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant’s audit committee at least annually. The registrant’s audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant’s principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the registrant’s audit committee pursuant to the “de minimis exception” set forth in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed for services rendered to all of the Series in the Trust by D&T for the last two fiscal years of each Series; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the Eaton Vance organization by D&T for the last two fiscal years of each Series.
| Fiscal Years Ended |
1/31/23 | 1/31/24 | ||||||
| Registrant(1) |
$ | 5,825 | $ | 0 | ||||
| Eaton Vance(2) |
$ | 52,836 | $ | 52,836 | ||||
| (1) | Includes all of the Series of the Trust. |
| (2) | The investment adviser to the Series, as well as any of its affiliates that provide ongoing services to the Series, are subsidiaries of Morgan Stanley. |
(h) The registrant’s audit committee has considered whether the provision by the registrant’s principal accountant of non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible with maintaining the principal accountant’s independence.
(i) Not applicable.
(j) Not applicable.
Item 5. Audit Committee of Listed Registrant
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/ Kenneth A. Topping | |
| Kenneth A. Topping | ||
| President |
Date: March 25, 2024
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: March 25, 2024
| By: | /s/ Kenneth A. Topping | |
| Kenneth A. Topping | ||
| President |
Date: March 25, 2024