Overview

Strong Morningstar Ratings as of 03/31/2017.1

Historical Returns (%)as of Mar 31, 2017

Annualized
1 Mo. 3 Mos. YTD 1 Yr. 3 Yrs. 5 Yrs. Life of Fund
05/31/2017
Fund at NAV 1.44 2.95 4.14 1.31 4.15 4.15 5.67
Fund w/Max Sales Charge -3.39 -1.93 -0.84 -3.49 2.48 3.14 4.81
Return After Taxes on Dist w/Max Sales Charge -3.81 2.30 2.86 4.53
Return After Taxes on Dist & Sales of Fund Shares w/Max Sales Charge -1.31 2.19 2.71 4.06
Bloomberg Barclays Municipal Bond Index2 1.59 2.55 3.94 1.46 3.49 3.31 4.46
03/31/2017
Fund at NAV 0.45 1.60 1.60 -0.06 4.75 4.29 5.39
Fund w/Max Sales Charge -4.32 -3.25 -3.25 -4.83 3.06 3.28 4.51
Return After Taxes on Dist w/Max Sales Charge -5.14 2.88 2.99 4.23
Return After Taxes on Dist & Sales of Fund Shares w/Max Sales Charge -2.09 2.65 2.83 3.83
Bloomberg Barclays Municipal Bond Index2 0.22 1.58 1.58 0.15 3.55 3.24 4.18
Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) with all distributions reinvested. Returns for other classes of shares offered by the Fund are different. Performance less than or equal to one year is cumulative. After-tax returns are calculated using certain assumptions, including using the highest historical individual federal income tax rates, and do not reflect the impact of state/local taxes. Actual after-tax returns depend on a shareholder's tax situation and the actual characterization of distributions and may differ from those shown. After-tax returns are not relevant to shareholders who hold shares in tax-deferred accounts or shares held by nontaxable entities. Return After Taxes on Distributions may be the same as Return Before Taxes for the same period because no taxable distributions were made during that period. Return After Taxes on Distributions and Sale of Fund Shares may be greater than or equal to Return After Taxes on Distributions for the same period because of losses realized on the sale of Fund shares. Before-tax and after-tax returns for other classes of shares offered by the Fund are different. Max Sales Charge: 4.75%.

Fund Factsas of May 31, 2017

Class A Inception 05/31/2011
Investment Objective Maximize after-tax total return
Total Net Assets $766.7M
Minimum Investment $1000
Expense Ratio3 0.97%
CUSIP 27826Y571

Top 10 Holdings (%)4,5as of May 31, 2017

State of California
State of Illinois
Hartford HealthCare Obligated Group
Nuveen AMT-Free Quality Municipal Income Fund
New York City Water Sewer System
Care New England Health System
State of Illinois
Metropolitan Transportation Authority
Triborough Bridge Tunnel Authority
Presence Health Network Obligated Group
Total 16.06

Morningstar Rating™as of May 31, 2017

Time Period Rating Funds in
Muni National Interm
Category
Overall **** 264
3 Years **** 264
5 Years **** 227
The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds and exchange-traded funds) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.

The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Star ratings do not reflect the effect of any applicable sales load.

©2017 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Portfolio Management

Adam A. Weigold, CFA Managed Fund since inception

The information included herein does not reflect securities deemed to be held by the Fund pursuant to financial accounting standard 140 (FAS 140).

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. As interest rates rise, the value of certain income investments is likely to decline. Longer-term bonds typically are more sensitive to interest-rate changes than shorter-term bonds. Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of nonpayment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer's ability to make principal and interest payments. Because the Fund may invest significantly in a particular sector, the Fund share value may fluctuate more than a fund with less exposure to such sector. Investments rated below investment grade (typically referred to as "junk") are generally subject to greater price volatility and illiquidity than higher-rated investments. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can increase both the risk and return potential of the Fund), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.


Performance

Historical Returns (%)as of Mar 31, 2017

Annualized
1 Mo. 3 Mos. YTD 1 Yr. 3 Yrs. 5 Yrs. Life of Fund
05/31/2017
Fund at NAV 1.44 2.95 4.14 1.31 4.15 4.15 5.67
Fund w/Max Sales Charge -3.39 -1.93 -0.84 -3.49 2.48 3.14 4.81
Return After Taxes on Dist w/Max Sales Charge -3.81 2.30 2.86 4.53
Return After Taxes on Dist & Sales of Fund Shares w/Max Sales Charge -1.31 2.19 2.71 4.06
Bloomberg Barclays Municipal Bond Index2 1.59 2.55 3.94 1.46 3.49 3.31 4.46
Morningstar™ Muni National Interm Category6 1.30 2.25 3.37 0.89 2.62 2.58
03/31/2017
Fund at NAV 0.45 1.60 1.60 -0.06 4.75 4.29 5.39
Fund w/Max Sales Charge -4.32 -3.25 -3.25 -4.83 3.06 3.28 4.51
Return After Taxes on Dist w/Max Sales Charge -5.14 2.88 2.99 4.23
Return After Taxes on Dist & Sales of Fund Shares w/Max Sales Charge -2.09 2.65 2.83 3.83
Bloomberg Barclays Municipal Bond Index2 0.22 1.58 1.58 0.15 3.55 3.24 4.18
Morningstar™ Muni National Interm Category6 0.24 1.33 1.33 -0.31 2.71 2.57
Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) with all distributions reinvested. Returns for other classes of shares offered by the Fund are different. Performance less than or equal to one year is cumulative. After-tax returns are calculated using certain assumptions, including using the highest historical individual federal income tax rates, and do not reflect the impact of state/local taxes. Actual after-tax returns depend on a shareholder's tax situation and the actual characterization of distributions and may differ from those shown. After-tax returns are not relevant to shareholders who hold shares in tax-deferred accounts or shares held by nontaxable entities. Return After Taxes on Distributions may be the same as Return Before Taxes for the same period because no taxable distributions were made during that period. Return After Taxes on Distributions and Sale of Fund Shares may be greater than or equal to Return After Taxes on Distributions for the same period because of losses realized on the sale of Fund shares. Before-tax and after-tax returns for other classes of shares offered by the Fund are different. Max Sales Charge: 4.75%.

Calendar Year Returns (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Fund at NAV 9.17 -4.99 14.15 4.03 0.38
Bloomberg Barclays Municipal Bond Index2 3.36 -2.47 12.91 2.38 10.70 6.78 -2.55 9.05 3.30 0.25

Fund Facts

Expense Ratio3 0.97%
Class A Inception 05/31/2011
Distribution Frequency Monthly

Yield Information7as of May 31, 2017

Distribution Rate at NAV 1.97%
Taxable-Equivalent Distribution Rate at NAV8 3.48%
SEC 30-day Yield 1.69%
Taxable-Equivalent SEC 30-day Yield 2.99%

Morningstar Rating™as of May 31, 2017

Time Period Rating Funds in
Muni National Interm
Category
Overall **** 264
3 Years **** 264
5 Years **** 227
The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds and exchange-traded funds) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.

The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Star ratings do not reflect the effect of any applicable sales load.

©2017 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

NAV History

Date NAV NAV Change
Jun 23, 2017 $11.93 $0.00
Jun 22, 2017 $11.93 $0.01
Jun 21, 2017 $11.92 $0.00
Jun 20, 2017 $11.92 $0.00
Jun 19, 2017 $11.92 -$0.01
Jun 16, 2017 $11.93 $0.01
Jun 15, 2017 $11.92 -$0.01
Jun 14, 2017 $11.93 $0.01
Jun 13, 2017 $11.92 $0.00
Jun 12, 2017 $11.92 -$0.01

Distribution History9

Ex-Date Distribution Reinvest NAV
May 31, 2017 $0.02000 $11.93
Apr 28, 2017 $0.02115 $11.78
Mar 31, 2017 $0.02199 $11.68
Feb 28, 2017 $0.02251 $11.65
Jan 31, 2017 $0.02044 $11.59
Dec 30, 2016 $0.01998 $11.56
Nov 30, 2016 $0.01848 $11.54
Oct 31, 2016 $0.01712 $12.07
Sep 30, 2016 $0.01730 $12.22
Aug 31, 2016 $0.01736 $12.27
View All
No records in this table indicates that there has not been a distribution greater than .0001 within the past 3 years.
Fund prospectus

Capital Gain History9

Ex-Date Short-Term Long-Term Reinvest NAV
Dec 01, 2016 $0.05060 $11.42
Dec 11, 2014 $0.00550 $0.00330 $11.48
No records in this table indicates that there has not been a capital gain greater than .0001 within the past 3 years.
Fund prospectus

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. As interest rates rise, the value of certain income investments is likely to decline. Longer-term bonds typically are more sensitive to interest-rate changes than shorter-term bonds. Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of nonpayment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer's ability to make principal and interest payments. Because the Fund may invest significantly in a particular sector, the Fund share value may fluctuate more than a fund with less exposure to such sector. Investments rated below investment grade (typically referred to as "junk") are generally subject to greater price volatility and illiquidity than higher-rated investments. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can increase both the risk and return potential of the Fund), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.


Portfolio

Asset Mix (%)4,10as of May 31, 2017

Municipal Bonds 96.48
Municipal Closed End Fund 1.68
U.S. Corporate Bonds 1.56
Cash 0.28
Total 100.00

Portfolio Statisticsas of May 31, 2017

Number of Holdings 456
Average Coupon 4.21%
Average Maturity 9.20 yrs.
Average Effective Maturity 7.49 yrs.
Average Duration 4.74 yrs.
Average Call 6.65 yrs.
Average Price $110.26
% Subject to AMT 10.06%

Sector Breakdown (%)4as of May 31, 2017

Hospital 24.10
General Obligations 24.01
Transportation 10.26
Insured-General Obligations 5.00
Senior Living/Life Care 4.90
Special Tax Revenue 4.24
Other Revenue 4.01
Industrial Development Revenue 3.49
Education 3.42
Insured-Transportation 3.33
View All

Credit Quality (%)11as of May 31, 2017

AAA 5.28
AA 33.58
A 23.28
BBB 27.28
BB 2.29
CCC or Lower 2.17
Not Rated 6.12
Total 100.00
Ratings are based on Moody's, S&P or Fitch, as applicable. If securities are rated differently by the ratings agencies, the higher 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" are not rated by the national ratings agencies stated above.

Maturity Distribution (%)11as of May 31, 2017

Less Than 1 Year 3.97
1 To 3 Years 5.68
3 To 5 Years 6.95
5 To 10 Years 48.26
10 To 20 Years 30.13
20 To 30 Years 5.01
More Than 30 Years 0.00
Total 100.00

Assets by State (%)11,12as of May 31, 2017

Illinois 15.84
New York 14.65
California 9.72
Michigan 9.28
New Jersey 7.64
Texas 6.07
Pennsylvania 3.47
Oregon 3.24
Puerto Rico 2.82
Florida 2.67
View All

Fund Holdings4,13as of Apr 30, 2017

Holding Coupon Rate Maturity Date % of Net Assets
State of Illinois 5.00% 02/01/2028 2.12%
State of California 5.00% 08/01/2026 2.10%
Hartford HealthCare Obligated Group 1.62% 07/01/2049 1.83%
Nuveen AMT-Free Quality Municipal Income Fund 0.00% 1.72%
Care New England Health System 5.50% 09/01/2026 1.59%
State of Illinois 5.00% 02/01/2025 1.43%
Triborough Bridge & Tunnel Authority 1.36% 01/01/2032 1.34%
BP Products North America Inc 1.65% 12/01/2044 1.21%
Presence Health Network Obligated Group 5.00% 02/15/2028 1.20%
Chicago Midway International Airport 5.00% 01/01/2025 1.15%
View All

The information included herein does not reflect securities deemed to be held by the Fund pursuant to financial accounting standard 140 (FAS 140).

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. As interest rates rise, the value of certain income investments is likely to decline. Longer-term bonds typically are more sensitive to interest-rate changes than shorter-term bonds. Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of nonpayment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer's ability to make principal and interest payments. Because the Fund may invest significantly in a particular sector, the Fund share value may fluctuate more than a fund with less exposure to such sector. Investments rated below investment grade (typically referred to as "junk") are generally subject to greater price volatility and illiquidity than higher-rated investments. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can increase both the risk and return potential of the Fund), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.


Insights & Analysis

Commentary

A Word On The Markets as of Mar 31, 2017

The U.S. municipal bond market posted positive returns for the first quarter of 2017, with the Bloomberg Barclays Municipal Bond Index (the Index)2 returning 1.6% for the three-month period. After experiencing a significant amount of volatility following Donald Trump's presidential election victory during the fourth quarter of 2016, the municipal market stabilized during the first quarter. During the period, short-term municipal yields declined 20-25 basis points, while intermediate- and longer-term yields were flat to slightly higher.

After experiencing significantly negative outflows during the last six weeks of 2016, mutual fund flows stabilized and turned positive in January, as some investors sought to take advantage of both higher municipal yields and attractive relative valuations. Despite this expression of confidence at the beginning of the year, mutual fund flows for the entire quarter were fairly tepid with overall inflows totaling just under $5 billion. Issuance during the quarter declined to $88 billion compared to $100 billion during the fourth quarter of 2016. The slowdown in issuance was largely related to the a decline in refunding activity due to higher interest rates and the uncertainty surrounding President Trump's agenda for health care, tax reform and infrastructure spending.

Compared to the sharp sell-off during the fourth quarter, the municipal market was relatively quiet during the first quarter. Treasury yields traded in a fairly tight range and the curve was more or less unchanged. Meanwhile, the municipal yield curve steepened significantly as two- and five-year yields declined 19 and 24 basis points, respectively, while 30-year yields increased 1bp. As a result, short term municipals outperformed longer-term municipals with the five-and seven-year part of the curve leading the way.

In terms of credit quality, lower quality municipals outperformed higher quality as BBB's within the Index returned 2.2% compared to AAAs up 1.4%. Similarly, after underperforming significantly during the fourth quarter, the Bloomberg Barclays High Yield Municipal Bond Index14 returned 4.1%, significantly outperforming investment grade. This outperformance was primarily due to higher carry, spread tightening and renewed strength in the tobacco sector, which returned 13.1%. Finally, Puerto Rico credits underperformed significantly following the release of its Certified Financial Plan in mid-March, which proved to be more negative for all bondholders than previously anticipated.

Performance Summary 

Eaton Vance Municipal Opportunities Fund (the Fund) outperformed its benchmark, the Bloomberg Barclays Municipal Bond Index (the Index), at net asset value for the quarter.

  • Overweight exposure and security selection in various Illinois credits bolstered Fund performance.
  • Overweight exposure and security selection in BBB-rated credits aided Fund performance.
  • An overweight exposure and security selection in sub 4% coupon credits hurt relative Fund performance.
  • The Fund's use of Floating-rate municipal notes and variable rate demand notes detracted from performance relative to the Index.

Historical Returns (%)as of Mar 31, 2017

Annualized
1 Mo. 3 Mos. YTD 1 Yr. 3 Yrs. 5 Yrs. Life of Fund
Fund at NAV 0.45 1.60 1.60 -0.06 4.75 4.29 5.39
Fund w/Max Sales Charge -4.32 -3.25 -3.25 -4.83 3.06 3.28 4.51
Return After Taxes on Dist w/Max Sales Charge -5.14 2.88 2.99 4.23
Return After Taxes on Dist & Sales of Fund Shares w/Max Sales Charge -2.09 2.65 2.83 3.83
Bloomberg Barclays Municipal Bond Index2 0.22 1.58 1.58 0.15 3.55 3.24 4.18
Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) with all distributions reinvested. Returns for other classes of shares offered by the Fund are different. Performance less than or equal to one year is cumulative. After-tax returns are calculated using certain assumptions, including using the highest historical individual federal income tax rates, and do not reflect the impact of state/local taxes. Actual after-tax returns depend on a shareholder's tax situation and the actual characterization of distributions and may differ from those shown. After-tax returns are not relevant to shareholders who hold shares in tax-deferred accounts or shares held by nontaxable entities. Return After Taxes on Distributions may be the same as Return Before Taxes for the same period because no taxable distributions were made during that period. Return After Taxes on Distributions and Sale of Fund Shares may be greater than or equal to Return After Taxes on Distributions for the same period because of losses realized on the sale of Fund shares. Before-tax and after-tax returns for other classes of shares offered by the Fund are different. Max Sales Charge: 4.75%.

Fund Factsas of Mar 31, 2017

Class A Inception 05/31/2011
Expense Ratio3 0.97%

Contributors 

Factors contributing to the Fund's relative performance compared to the Index during the quarter:

  • Security selection was a key driver for the Fund's outperformance for the quarter. Specifically, the Fund's overweight position in Illinois credits and BBB rated bonds aided performance.
  • The Fund's relative performance was also boosted by an overweight exposure in the general obligations sector of the Index.

Detractors 

Factors detracting from the Fund's relative performance compared to the Index during the quarter:

  • The Fund's utilization of floating-rate municipal notes and variable rate demand obligations to help protect against rising short-term interest rates detracted from performance as short-term rates fell. The Index does not invest in these types of securities.
  • The Fund's overweight exposure to sub 4% coupon bonds hurt relative performance. In addition, security selection in zero coupon bonds detracted from relative performance as the zero coupon bonds in the Fund did not perform as well as the zeros in the Index.

Investment Outlook And Fund Positioning 

We believe munis continue to be attractive on both an absolute and relative level. Intermediate- and longer-term municipals stabilized during the quarter, and the 10- and 30-year municipal-to-Treasury ratios ended the quarter at 94% and 101%, respectively.

Lackluster mutual fund flows and the ongoing expectation of lower taxes under the Trump administration have combined to keep municipal valuations attractive, in our view. In addition, we continue to lack specific details related to the specifics of Trump's policies, what will get through Congress, and when. As a result, there are a wide range of potential outcomes.

In our view, the historic move higher in yields during the fourth quarter of 2016 created an emerging opportunity to lock in higher yields and potentially generate higher future returns. After the first three months of 2017, we believe this opportunity remains in place. In recent history, the municipal market has proven to be resilient and sharp increases in municipal yields have resulted in buying opportunities and rewarded investors with strong returns in subsequent months. Therefore, we continue to believe that municipal yields could move back down a bit in 2017. There are other factors that could cause rates to retrace a bit, especially on the longer end of the Treasury curve. First, U.S. Treasury yields are still historically low, but very attractive when compared with other developed markets such as Europe and Japan. Second, following the failure to reform the Affordable Care Act, uncertainty surrounding President Trump's ability to deliver on the policy front has increased. And finally, after increasing the fed Funds rate by 25 basis points during the first quarter, the Federal Reserve is forecasting two more rate hikes in 2017, demonstrating a willingness to squeeze off inflationary pressures, if necessary.

Given this outlook, we believe tax-sensitive investors continue to be offered the opportunity to scale into munis at attractive yields and valuations. In addition, we believe municipals will continue to act as an anchor to provide diversification in the context of an overall portfolio.15

Credit Quality (%)11as of Mar 31, 2017

AAA 6.50
AA 32.10
A 24.80
BBB 28.30
BB 1.90
CCC or Lower 2.20
Not Rated 4.10
Total 100.00
Ratings are based on Moody's, S&P or Fitch, as applicable. If securities are rated differently by the ratings agencies, the higher 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" are not rated by the national ratings agencies stated above.

The views expressed in this report are those of portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as "forward looking statements". The Fund's actual future results may differ significantly from those stated in any forward-looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund's filings with the Securities and Exchange Commission.

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

The information included herein does not reflect securities deemed to be held by the Fund pursuant to financial accounting standard 140 (FAS 140).

About Risk 

An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. As interest rates rise, the value of certain income investments is likely to decline. Longer-term bonds typically are more sensitive to interest-rate changes than shorter-term bonds. Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of nonpayment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer's ability to make principal and interest payments. Because the Fund may invest significantly in a particular sector, the Fund share value may fluctuate more than a fund with less exposure to such sector. Investments rated below investment grade (typically referred to as "junk") are generally subject to greater price volatility and illiquidity than higher-rated investments. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can increase both the risk and return potential of the Fund), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.

Attribution

No attribution information is currently available.

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. As interest rates rise, the value of certain income investments is likely to decline. Longer-term bonds typically are more sensitive to interest-rate changes than shorter-term bonds. Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of nonpayment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer's ability to make principal and interest payments. Because the Fund may invest significantly in a particular sector, the Fund share value may fluctuate more than a fund with less exposure to such sector. Investments rated below investment grade (typically referred to as "junk") are generally subject to greater price volatility and illiquidity than higher-rated investments. Derivative instruments can be used to take both long and short positions, be highly volatile, result in economic leverage (which can increase both the risk and return potential of the Fund), and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. If a counterparty is unable to honor its commitments, the value of Fund shares may decline and/or the Fund could experience delays in the return of collateral or other assets held by the counterparty. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.


Management

Biography
Adam A. Weigold, CFA

Adam A. Weigold, CFA

Vice President, Eaton Vance Management
Joined Eaton Vance 1998

Adam Weigold is a vice president of Eaton Vance Management and senior portfolio manager on Eaton Vance’s municipal bond team. He is responsible for buy and sell decisions, portfolio construction and risk management for the firm’s municipal bond strategies. He began his career in the investment management industry with Eaton Vance in 1998.

Adam earned a B.A. from Dartmouth College and an MBA from Boston University. He is a member of the Boston Security Analysts Society and the National Federation of Municipal Analysts. He is a CFA charterholder.

Education
  • B.A. Dartmouth College
  • M.B.A. Boston University

Experience
  • Managed Fund since inception


Literature

Literature

Fact Sheet

Download - Last updated: Mar 31, 2017

Fact Sheet

Download - Last updated: Mar 31, 2017

Commentary

Download - Last updated: Mar 31, 2017

Attribution

Download - Last updated: Mar 31, 2017

Annual Report

Download - Last updated: Jul 31, 2016

Municipal Market Chart book

Download - Last updated: Mar 31, 2017

Full Prospectus

Download - Last updated: Dec 1, 2016

Holdings-1st or 3rd fiscal quarters-www.sec.gov

Download

Eaton Vance municipal funds' holdings in Puerto Rico debt

Download - Last updated: May 5, 2017

SAI

Download - Last updated: Dec 1, 2016

Semiannual Report

Download - Last updated: Jan 31, 2017

Summary Prospectus

Download - Last updated: Apr 10, 2017

XBRL

Download - Last updated: Dec 15, 2016