Annual Report January 31, 2023
Eaton Vance
Municipal Income 2028 Term Trust
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Management’s Discussion of Fund Performance†
Economic and Market Conditions
The volatile 12-month period starting February 1, 2022,
encompassed the worst one-month performance for municipal bond returns since 2008 and the best one-month performance in 36 years.
As the period began, municipal rates -- along with U.S.
Treasury rates -- rose as investors became increasingly concerned about the twin threats of inflation and interest rate hikes. On February 24, 2022, Russia’s invasion of Ukraine sent shock waves through markets worldwide, exacerbating
inflationary pressures on energy and food prices. In March, the U.S. Federal Reserve (the Fed) ended a two-year period of near-zero-percent interest rates with a 0.25% increase, its first hike since 2018.
As investors recognized the potential for the Fed to raise
interest rates at every policy meeting in 2022 to combat inflation, the Bloomberg Municipal Bond Index (the Index), a broad measure of the municipal bond market, declined 8.98% during the first half of 2022. Municipal bond mutual funds, which had
reported net inflows during all but one week of 2021, recorded their worst outflow cycle on record.
In July 2022, however, municipal bond performance briefly
turned positive. Helped by a light supply of new issues and increased demand from the reinvestment of maturing debt and coupon payments, municipal mutual funds experienced their first net inflows since January.
From August through October 2022, municipal performance turned
negative again. Fund outflows resumed as investors reacted to statements by Fed officials that they were not done with rate hikes and fighting inflation remained the central bank’s top priority. After the Fed’s third straight 0.75% rate
hike, the Index fell 3.84% in September -- its worst one-month performance in 14 years.
But in the final months of the period, municipal performance
made another U-turn. Despite the Fed announcing a fourth 0.75% rate hike in November, the Index rose 4.68% during the month -- its best monthly performance since 1986. The rally was driven by multiple factors, including Fed signals that future rate
hikes might be smaller, lower supplies of new municipal bond issues, growing investor demand, and positive inflows into separately managed accounts and exchange-traded funds, or ETFs.
The Fed indeed delivered a smaller 0.50% rate hike in December,
but raised expectations of how high rates might go in 2023. The Index -- helped by attractive yields and limited supply -- nonetheless eked out a slightly positive performance in December. As the period came to a close in January 2023, municipal
bonds delivered a third straight month of positive performance, driven by a light supply of new issues and the return of inflows into open-end mutual funds.
For the period as a whole, the Index returned -3.25% as
interest rates rose and bond prices declined across the municipal bond yield curve. Municipal bonds outperformed U.S. Treasurys along the curve as well. Higher quality municipal bonds generally outperformed lower quality municipal bonds, reflecting
decreased investor appetite for risk during the period.
Fund Performance
For the 12-month period ended January 31, 2023, Eaton Vance
Municipal Income 2028 Term Trust (the Fund) returned -3.66% at net asset value of its common shares (NAV), underperforming its benchmark, the Bloomberg Barclays 5 Year Municipal Bond Index (the Index), which returned -0.95%.
Effective December 31, 2022, the Index was changed from the
Bloomberg Barclays 7 Year Municipal Bond Index, reflecting the shorter time until the Fund’s planned 2028 termination date.
The Fund’s investment objective is to provide current
income exempt from regular federal income tax. The Fund seeks to achieve this by investing primarily in municipal obligations, a portion of which may be rated investment-grade, and a portion of which may be rated below investment-grade at the time
of investment. Management seeks to add value through relative-value trading, a strategy that seeks to take advantage of price and rate differences among similar securities within the municipal bond market.
Detractors from Fund performance versus the Index during the
period included security selections and an overweight position in the health care sector, out-of-Index positions in bonds with more than six years remaining to maturity (the Index includes only bonds with four to six years remaining to maturity),
and the Fund’s use of leverage.
The Fund seeks to
enhance tax-exempt income by entering into residual interest bond transactions and investing the proceeds in additional municipal securities, which creates leverage within the Fund. Leverage has the effect of magnifying the Fund’s exposure to
its underlying investments in both up and down markets. During this period of negative performance by the municipal bond market, leverage detracted from Fund performance relative to the Index, which does not employ leverage.
See Endnotes and
Additional Disclosures in this report.
Past
performance is no guarantee of future results. Returns are historical and are calculated net of management fees and other expenses by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions
reinvested in accordance with the Fund’s Dividend Reinvestment Plan. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Performance at market
price will differ from performance at NAV due to variations in the Fund’s market price versus NAV, which may reflect factors such as fluctuations in supply and demand for Fund shares, changes in Fund distributions, shifting market expectations
for the Fund’s future returns and distribution rates, and other considerations affecting the trading prices of closed-end funds. Investment return and principal value will fluctuate so that shares, when sold, 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.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Management’s
Discussion of Fund Performance† — continued
In contrast, contributors to Fund performance relative to the
Index during the period included security selections in 4% coupon bonds; security selections in AA-rated bonds; and security selections in the industrial development revenue sector.
See Endnotes and
Additional Disclosures in this report.
Past performance
is no guarantee of future results. Returns are historical and are calculated net of management fees and other expenses by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested in
accordance with the Fund’s Dividend Reinvestment Plan. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Performance at market price will differ
from performance at NAV due to variations in the Fund’s market price versus NAV, which may reflect factors such as fluctuations in supply and demand for Fund shares, changes in Fund distributions, shifting market expectations for the
Fund’s future returns and distribution rates, and other considerations affecting the trading prices of closed-end funds. Investment return and principal value will fluctuate so that shares, when sold, 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.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Performance
Portfolio Manager(s) Craig R.
Brandon, CFA and Julie Callahan, CFA
| %
Average Annual Total Returns1,2 |
Inception
Date |
One
Year |
Five
Years |
Since
Inception |
| Fund
at NAV |
03/28/2013
|
(3.66)%
|
2.93%
|
4.49%
|
| Fund
at Market Price |
—
|
(5.82)
|
2.92
|
4.09
|
|
| Bloomberg
5 Year Municipal Bond Index |
—
|
(0.95)%
|
1.68%
|
1.67%
|
| Bloomberg
7 Year Municipal Bond Index |
—
|
(1.01)
|
2.14
|
2.19
|
| %
Premium/Discount to NAV3 |
|
| As
of period end |
(3.69)%
|
| Distributions
4 |
|
| Total
Distributions per share for the period |
$0.814
|
| Distribution
Rate at NAV |
3.85%
|
| Taxable-Equivalent
Distribution Rate at NAV |
6.50
|
| Distribution
Rate at Market Price |
4.00
|
| Taxable-Equivalent
Distribution Rate at Market Price |
6.75
|
| %
Total Leverage5 |
|
| Residual
Interest Bond (RIB) Financing |
32.64%
|
Growth of $10,000
This graph shows the change in value of a hypothetical
investment of $10,000 in the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are
historical and are calculated net of management fees and other expenses by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested in accordance with the Fund’s Dividend
Reinvestment Plan. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Performance at market price will differ from performance at NAV due to variations
in the Fund’s market price versus NAV, which may reflect factors such as fluctuations in supply and demand for Fund shares, changes in Fund distributions, shifting market expectations for the Fund’s future returns and distribution rates,
and other considerations affecting the trading prices of closed-end funds. Investment return and principal value will fluctuate so that shares, when sold, 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.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
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. |
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡
Investment Objectives. The
Fund’s investment objective is to provide current income exempt from regular federal income tax.
Principal Strategies. During
normal market conditions, the Fund will invest at least 80% of its net assets, plus borrowings for investment purposes, in debt obligations issued by or on behalf of states, territories and possessions of the United States, including the District of
Columbia, and their political subdivisions, agencies or instrumentalities, the interest on which is exempt from regular federal income tax (“municipal obligations”). For purposes of this 80% policy, municipal obligations will include the
value of residual interest bonds whose interest is exempt from regular federal income tax. Up to 30% of the Fund’s total managed assets may be invested in municipal obligations that pay interest that is taxable under the federal alternative
minimum tax applicable to individuals.
Under
normal market conditions, the Fund will invest at least 50% of its total managed assets in municipal obligations that, at the time of investment, are investment grade quality. A municipal obligation is considered investment grade quality if it is
rated Baa3 or higher by Moody’s Investors Service, Inc. (“Moody’s”), BBB- or higher by Standard & Poor’s Ratings Group (“S&P”), or BBB- or higher by Fitch Ratings (“Fitch”) (each of
Moody’s, S&P and Fitch, a “Rating Agency”) or, if unrated, is determined by the Fund’s investment adviser to be of investment grade quality. If a municipal obligation is rated differently by two or more Rating Agencies,
the Fund will use the higher of such ratings (the “Municipal Obligation Rating”). The Fund may invest no more than 10% of its total managed assets in municipal obligations that, at the time of investment, have a Municipal Obligation
Rating that is below B-/B3 or are unrated and considered by the investment adviser to be of comparable quality. The Fund will invest no more than 10% of its total managed assets in tobacco settlement bonds.
If a municipal obligation is insured, the Fund will use the
higher of the Municipal Obligation Rating or the insurance issuer’s rating. From time to time, the Fund may hold a significant amount of municipal obligations not rated by a nationally recognized statistical rating organization. When the Fund
invests in unrated municipal obligations, it may be more dependent on the investment adviser’s research capabilities than when it invests in rated municipal obligations.
The Fund may purchase and sell derivative instruments, which
derive their value from another instrument, security or index, including financial futures contracts, swap contracts (including interest rate and credit default swaps), options on financial futures, options on swap contracts, or other derivative
instruments, as a substitute for the purchase of securities or for other risk management purposes. The Fund also may invest in residual interest bonds of a trust (the “trust”) that holds municipal securities. The Fund will also issue
floating-rate notes to third parties that may be senior to the Fund’s residual interest. The Fund has no current intention to invest 25% or more of its total managed assets in municipal obligations of issuers located in the same state (or U.S.
territory), but reserves the flexibility to do so in the future.
The Fund intends to cease its investment operations on or about
June 30, 2028 (the “Termination Date”) and thereafter liquidate its portfolio, retire or redeem leverage facilities and distribute its net assets to common shareholders of record as of the Termination Date. The Fund’s term may be
extended for a period of not more than 12 months from the Termination Date by a vote of the Board, if the Board determines it is in the best interest of the common shareholders to do so. The Fund’s term may not be extended further than a 12
month period without a common shareholder vote.
Except
for certain fundamental investment restrictions set forth in the Fund’s registration statement and the 80% requirement set forth above, the investment objective and policies of the Fund may be changed by the Board without shareholder
action.
The Fund employs leverage to seek opportunities
for additional income. The Fund does not intend to utilize leverage in excess of 45% of its total managed assets. For these purposes, leverage includes exposure created through investment in residual interest bonds, borrowings, and the issuance of
preferred shares and debt securities, but not economic exposure that may be created by investing in derivative instruments. Leverage may amplify any increase or decrease in the value of investments held by the Fund. The Fund generally will not use
leverage if the investment adviser anticipates that it would result in a lower return to shareholders for any significant amount of time. There can be no assurance that the use of leverage will be successful.
Principal Risks
Market Discount Risk. As with
any security, the market value of the common shares may increase or decrease from the amount initially paid for the common shares. The Fund’s common shares have traded both at a premium and at a discount relative to NAV. The shares of
closed-end management investment companies frequently trade at a discount from their NAV. This is a risk separate and distinct from the risk that the Fund’s NAV may decrease
Market Risk. The value of
investments held by the Fund may increase or decrease in response to social, economic, political, financial, public health crises or other disruptive events (whether real, expected or perceived) in the U.S. and global markets and include
events such as war, natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest. These events may negatively impact broad segments of businesses and populations and may exacerbate pre-existing risks to the Fund. The frequency
and magnitude of resulting changes in the value of the Fund’s investments cannot be predicted. Certain securities and other investments held by the Fund may experience increased volatility, illiquidity, or other potentially adverse effects in
reaction to changing market conditions. Monetary and/or fiscal actions taken by U.S. or foreign governments to stimulate or stabilize the global economy may not be effective and could lead to high market volatility. No active trading market may
exist for certain investments held by the Fund, which may impair the ability of the Fund to sell or to realize the current valuation of such investments in the event of the need to liquidate such assets.
See Endnotes and
Additional Disclosures in this report.
6
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
15-year Term Risk. Because the
assets of the Fund will be liquidated in connection with its termination, the Fund may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable, which may cause the Fund to
lose money. The Fund’s investment objective and policies are not designed to seek to return to investors who purchase shares in the Fund’s initial offering their initial investment on the Termination Date. When terminated, the
Fund’s distributions will be based upon the Fund’s net asset value at the end of the term and such initial investors and any investors that purchase shares after the completion of the Fund’s initial offering may receive more or
less than their original investment upon termination.
Municipal Obligations Risk. The
amount of public information available about municipal obligations is generally less than for corporate equities or bonds, meaning that the investment performance of municipal obligations may be more dependent on the analytical abilities of the
investment adviser than stock or corporate bond investments. The secondary market for municipal obligations also tends to be less well-developed and less liquid than many other securities markets, which may limit the Fund’s ability to sell its
municipal obligations at attractive prices. The differences between the price at which an obligation can be purchased and the price at which it can be sold may widen during periods of market distress. Less liquid obligations can become more
difficult to value and be subject to erratic price movements. The increased presence of nontraditional participants (such as proprietary trading desks of investment banks and hedge funds) or the absence of traditional participants (such as
individuals, insurance companies, banks and life insurance companies) in the municipal markets may lead to greater volatility in the markets because non-traditional participants may trade more frequently or in greater volume.
Interest Rate Risk. In general,
the value of debt instruments will fluctuate based on changes in interest rates. The value of these securities is likely to increase when interest rates fall and decline when interest rates rise. Duration measures the time-weighted expected cash
flows of a fixed-income security, while maturity refers to the amount of time until a fixed-income security matures. Generally, securities with longer durations or maturities are more sensitive to changes in interest rates than securities with
shorter durations or maturities, causing them to be more volatile. Conversely, fixed-income securities with shorter durations or maturities will be less volatile but may provide lower returns than fixed-income securities with longer durations or
maturities. Because the Fund is managed toward an income objective, it may hold more longer duration or maturity obligations and thereby be more exposed to interest rate risk than municipal income funds that are managed with a greater emphasis on
total return. The impact of interest rate changes is significantly less for floating-rate instruments that have relatively short periodic rate resets (e.g., ninety days or less). In a rising interest rate environment, the durations or maturities of
income securities that have the ability to be prepaid or called by the issuer may be extended. In a declining interest rate environment, the proceeds from prepaid or maturing instruments may have to be reinvested at a lower interest rate. Certain
instruments held by the Fund may pay an interest rate based on the London Interbank Offered Rate (“LIBOR”), which is the average offered rate for various maturities of short-term loans between certain major international banks. LIBOR is
used throughout global banking and financial industries to determine interest rates for a variety of financial instruments (such as debt instruments and derivatives) and borrowing arrangements. The ICE Benchmark Administration Limited, the
administrator of LIBOR, ceased publishing certain LIBOR settings on December 31, 2021, and is expected to cease publishing the remaining LIBOR settings on June 30, 2023. Although the transition process away from LIBOR has become increasingly well
defined, the impact on certain debt securities, derivatives and other financial instruments that utilize LIBOR remains uncertain. The phase-out of LIBOR may result in, among other things, increased volatility or illiquidity in markets for
instruments based on LIBOR and changes in the value of such instruments.
Credit Risk. Investments in
municipal obligations and other debt obligations (referred to below as “debt instruments”) are subject to the risk of non-payment of scheduled principal and interest. Changes in economic conditions or other circumstances may reduce the
capacity of the party obligated to make principal and interest payments on such instruments and may lead to defaults. Such non-payments and defaults may reduce the value of Fund shares and income distributions. The value of debt instruments also may
decline because of concerns about the issuer’s ability to make principal and interest payments. In addition, the credit ratings of debt instruments may be lowered if the financial condition of the party obligated to make payments with respect
to such instruments deteriorates. In order to enforce its rights in the event of a default, bankruptcy or similar situation, the Fund may be required to retain legal or similar counsel, which may increase the Fund’s operating expenses and
adversely affect net asset value. Municipal obligations may be insured as to principal and interest payments. If the claims-paying ability or other rating of the insurer is downgraded by a rating agency, the value of such obligations may be
negatively affected.
Lower Rated Investments Risk. Investments rated below investment grade and comparable unrated investments (sometimes referred to as “junk”) have speculative characteristics because of the credit risk associated with their issuers.
Changes in economic conditions or other circumstances typically have a greater effect on the ability of issuers of lower rated investments to make principal and interest payments than they do on issuers of higher rated investments. An economic
downturn generally leads to a higher non-payment rate, and a lower rated investment may lose significant value before a default occurs. Lower rated investments typically are subject to greater price volatility and illiquidity than higher rated
investments.
Leverage Risk. Certain Fund transactions may give rise to leverage. Leverage can result from a non-cash exposure to an underlying reference instrument. Leverage can also result from borrowings, issuance of preferred shares or
participation in residual interest bond transactions. Leverage can increase both the risk and return potential of the Fund. The use of leverage may cause the Fund to maintain liquid assets or liquidate portfolio positions when it may not be
advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage may cause the Fund’s NAV to be more volatile than if it had not been leveraged, as certain types of leverage may exaggerate the effect of any
increase or decrease in the Fund’s portfolio securities. The loss on leveraged investments may substantially exceed the initial investment.
See Endnotes and Additional Disclosures in this report.
7
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
Risk of Residual Interest
Bonds. The Fund may enter into residual interest bond transactions, which expose the Fund to leverage and greater risk than an investment in a fixed-rate municipal bond. The interest payments that the Fund receives
on the residual interest bonds acquired in such transactions vary inversely with short-term interest rates, normally decreasing when short-term rates increase. The value and market for residual interest bonds are volatile and such bonds may have
limited liquidity. As required by applicable accounting standards, the Fund records interest expense on its liability with respect to floating-rate notes and also records offsetting interest income in an amount equal to this expense.
Restricted Securities Risk.
Unless registered for sale to the public under applicable federal securities law, restricted securities can be sold only in private transactions to qualified purchasers pursuant to an exemption from registration. The sale price realized from a
private transaction could be less than the Fund’s purchase price for the restricted security. It may be difficult to identify a qualified purchaser for a restricted security held by the Fund and such security could be deemed illiquid. It may
also be more difficult to value such securities.
Derivatives Risk. The
Fund’s exposure to derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other investments. The use of derivatives can lead to losses because of adverse movements in
the price or value of the security, instrument, index, currency, commodity, economic indicator or event underlying a derivative (“reference instrument”), due to failure of a counterparty or due to tax or regulatory constraints.
Derivatives may create leverage in the Fund, which represents a non-cash exposure to the underlying reference instrument. Leverage can increase both the risk and return potential of the Fund. Derivatives risk may be more significant when derivatives
are used to enhance return or as a substitute for a cash investment position, rather than solely to hedge the risk of a position held by the Fund. Use of derivatives involves the exercise of specialized skill and judgment, and a transaction may be
unsuccessful in whole or in part because of market behavior or unexpected events. Changes in the value of a derivative (including one used for hedging) may not correlate perfectly with the underlying reference instrument. Derivative instruments
traded in over-the-counter markets may be difficult to value, may be illiquid, and may be subject to wide swings in valuation caused by changes in the value of the underlying reference instrument. If a derivative’s counterparty is unable to
honor its commitments, the value of Fund shares may decline and the Fund could experience delays in (or be unable to achieve) the return of collateral or other assets held by the counterparty. The loss on derivative transactions may substantially
exceed the initial investment. A derivative investment also involves the risks relating to the reference instrument underlying the investment.
Liquidity Risk. The Fund is
exposed to liquidity risk when trading volume, lack of a market maker or trading partner, large position size, market conditions, or legal restrictions impair its ability to sell particular investments or to sell them at advantageous market prices.
Consequently, the Fund may have to accept a lower price to sell an investment or continue to hold it or keep the position open, sell other investments to raise cash or abandon an investment opportunity, any of which could have a negative effect on
the Fund’s performance. These effects may be exacerbated during times of financial or political stress.
Sector and Geographic Risk.
Because the Fund may invest a significant portion of its assets in obligations issued in a particular state and/or U.S. territories and in certain types of municipal or other obligations and/or in certain sectors, the value of Fund shares may be
affected by events that adversely affect that state, U.S. territory, sector or type of obligation and may fluctuate more than that of a fund that invests more broadly. General obligation bonds issued by municipalities are adversely affected by
economic downturns and any resulting decline in tax revenues.
Recent Market Conditions. The
outbreak of COVID 19 and efforts to contain its spread have resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines, cancellations, disruptions to supply chains and customer
activity, as well as general concern and uncertainty. The impact of this coronavirus and the effects of other infectious illness outbreaks, epidemics or pandemics, may be short-term or may continue for an extended period of time. Health crises
caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks and disrupt normal market conditions and operations. For example, a global pandemic or other widespread health
crisis could cause substantial market volatility and exchange trading suspensions and closures. In addition, the increasing interconnectedness of markets around the world may result in many markets being affected by events or conditions in a single
country or region or events affecting a single or small number of issuers. The coronavirus outbreak and public and private sector responses thereto have led to large portions of the populations of many countries working from home for indefinite
periods of time, temporary or permanent layoffs, disruptions in supply chains, and lack of availability of certain goods. The impact of such responses could adversely affect the information technology and operational systems upon which the Fund and
the Fund’s service providers rely, and could otherwise disrupt the ability of the employees of the Fund’s service providers to perform critical tasks relating to the Fund. Any such impact could adversely affect the Fund’s
performance, or the performance of the securities in which the Fund invests and may lead to losses on your investment in the Fund.
Risks Associated with Active Management. The success of the Fund’s investment strategy depends on portfolio management’s successful application of analytical skills and investment judgment. Active management involves subjective decisions and there
is no guarantee that such decisions will produce the desired results or expected returns.
Tax Risk. Income from
tax-exempt municipal obligations could be declared taxable because of changes in tax laws, adverse interpretations by the relevant taxing authority or the non-compliant conduct of the issuer of an obligation.
Tax-Sensitive Investing Risk.
The Fund may hold a security in order to achieve more favorable tax-treatment or to sell a security in order to create tax losses. The Fund’s utilization of various tax-management techniques may be curtailed or eliminated by tax legislation,
regulation or interpretations. The Fund may not be able to minimize taxable distributions to shareholders and a portion of the Fund’s distributions may be taxable.
See Endnotes and Additional Disclosures in this report.
8
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
Cybersecurity Risk. With the
increased use of technologies by Fund service providers to conduct business, such as the Internet, the Fund is susceptible to operational, information security and related risks. In general, cyber incidents can result from deliberate attacks or
unintentional events. Cybersecurity failures by or breaches of the Fund’s investment adviser or administrator and other service providers (including, but not limited to, the custodian or transfer agent), and the issuers of securities in which
the Fund invests, may disrupt and otherwise adversely affect their business operations. This may result in financial losses to the Fund, impede Fund trading, interfere with the Fund’s ability to calculate its net asset value, interfere with
Fund shareholders’ ability to transact business or cause violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs.
General Fund Investing Risks.
The Fund is not a complete investment program and there is no guarantee that the Fund will achieve its investment objective. It is possible to lose money by investing in the Fund. An investment in the Fund is not a deposit in a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Important Notices to Shareholders
The following information in this annual report is a summary of
certain changes since January 31, 2022. This information may not reflect all of the changes that have occurred since you purchased this Fund.
On January 26, 2023, the Fund’s Board of Trustees voted
to exempt, on a going forward basis, all prior and, until further notice, new acquisitions of Fund shares that otherwise might be deemed “Control Share Acquisitions” under the Fund’s By-Laws from the Control Share Provisions of the
Fund’s By-Laws.
Effective December 31, 2022, the
Fund’s benchmark was changed to the Bloomberg 5 Year Municipal Bond Index because the investment adviser believes it is more closely aligned with the Fund’s investment objective and strategies.
See Endnotes and
Additional Disclosures in this report.
9
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Endnotes and
Additional Disclosures
| †
|
The views expressed in this
report are those of the portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance and the Fund(s) disclaim any
responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund.
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. |
| ‡ |
The information contained
herein is provided for informational purposes only and does not constitute a solicitation of an offer to buy or sell Fund shares. Common shares of the Fund are available for purchase and sale only at current market prices in secondary market
trading. |
| |
|
| 1 |
Bloomberg 5 Year Municipal
Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 4-6 years. Bloomberg 7 Year Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. with maturities ranging from 6-8 years.
Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
|
2 |
Performance
results reflect the effects of leverage. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. |
|
3 |
The
shares of the Fund often trade at a discount or premium to their net asset value. The discount or premium may vary over time and may be higher or lower than what is quoted in this report. For up-to-date premium/discount information, please refer to
https://funds.eatonvance.com/closed-end-fund-prices.php. |
| 4 |
The Distribution Rate is
based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV or market price at the end of the period. The Fund’s distributions may be comprised of amounts characterized for federal
income tax purposes as tax-exempt income, qualified and non-qualified ordinary dividends, capital gains and nondividend distributions, also known as return of capital. The Fund will determine the federal income tax character of distributions paid to
a shareholder after the end of the calendar year. This is reported on the IRS form 1099-DIV and provided to the shareholder shortly after each year-end. For information about the tax character of distributions made in prior calendar years, please
refer to Performance-Tax Character of Distributions on the Fund’s webpage available at eatonvance.com. The Fund’s distributions are determined by the investment adviser based on its current assessment of the Fund’s long-term return
potential. Fund distributions may be affected by numerous factors including changes in Fund performance, the cost of financing for leverage, portfolio holdings, realized and projected returns, and other factors. As portfolio and market conditions
change, the rate of distributions paid by the Fund could change. Taxable-equivalent performance is based on the highest combined federal and state income tax rates, where applicable. Lower tax rates would result in lower tax-equivalent performance.
Actual tax rates will vary depending on your income, exemptions and deductions. Rates do not include local taxes. |
|
5 |
Fund
employs RIB financing. The leverage created by RIB investments provides an opportunity for increased income but, at the same time, creates special risks (including the likelihood of greater price volatility). The cost of leverage rises and falls
with changes in short-term interest rates. See “Floating Rate Notes Issued in Conjunction with Securities Held” in the notes to the financial statements for more information about RIB financing. RIB leverage represents the amount of
Floating Rate Notes outstanding at period end as a percentage of Fund net assets plus Floating Rate Notes. |
| |
Fund profile subject to
change due to active management. |
| |
Additional Information
|
| |
Bloomberg Municipal Bond
Index is an unmanaged index of municipal bonds traded in the U.S. |
| |
Yield
curve is a graphical representation of the yields offered by bonds of various maturities. The yield curve flattens when long-term interest rates fall and/or short-term interest rates increase, and the yield curve steepens when long-term interest
rates increase and/or short-term interest rates fall. |
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Education
— 1.1% |
| Grand
Canyon University, 4.125%, 10/1/24 |
$
|
2,500
|
$
2,382,650 |
Total
Corporate Bonds
(identified cost $2,477,500) |
|
|
$ 2,382,650
|
| Tax-Exempt
Municipal Obligations — 143.3% |
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Bond
Bank — 0.7% |
| Rickenbacker
Port Authority, OH, (OASBO Expanded Asset Pooled Financing Program), 5.375%, 1/1/32 |
$
|
1,160
|
$
1,366,712 |
| |
|
|
$ 1,366,712
|
| Education
— 1.0% |
| Capital
Trust Agency, FL, (Florida Charter Educational Foundation, Inc.), 4.50%, 6/15/28(1) |
$
|
505
|
$
498,581 |
| Capital
Trust Agency, FL, (Liza Jackson Preparatory School, Inc.), 4.00%, 8/1/30 |
|
400
|
405,588
|
| District
of Columbia, (Rocketship DC Obligated Group), 5.00%, 6/1/29(1) |
|
465
|
477,639
|
| Florida
Higher Educational Facilities Financing Authority, (Jacksonville University), 4.50%, 6/1/33(1) |
|
265
|
254,805
|
| Pinellas
County Educational Facilities Authority, FL, (Pinellas Academy of Math and Science), 4.125%, 12/15/28(1) |
|
445
|
452,623
|
| |
|
|
$ 2,089,236
|
| Escrowed/Prerefunded
— 33.1% |
| Clovis
Unified School District, CA, (Election of 2012): |
|
|
|
| Prerefunded
to 8/1/24, 0.00%, 8/1/28 |
$
|
1,000
|
$
820,700 |
| Prerefunded
to 8/1/24, 0.00%, 8/1/29 |
|
2,395
|
1,875,429
|
| Prerefunded
to 8/1/24, 0.00%, 8/1/30 |
|
2,575
|
1,920,126
|
| Delaware
Health Facilities Authority, (Nanticoke Memorial Hospital), Prerefunded to 7/1/23, 5.00%, 7/1/28 |
|
2,500
|
2,526,450
|
| Fresno
Unified School District, CA, (Election of 2010): |
|
|
|
| Prerefunded
to 8/1/24, 0.00%, 8/1/30 |
|
800
|
586,136
|
| Prerefunded
to 8/1/24, 0.00%, 8/1/31 |
|
955
|
665,530
|
| Illinois
Finance Authority, (Plymouth Place, Inc.), Prerefunded to 5/15/25, 5.00%, 5/15/30 |
|
2,750
|
2,912,112
|
| Lancaster
Industrial Development Authority, PA, (Garden Spot Village), Prerefunded to 5/1/23, 5.375%, 5/1/28 |
|
600
|
604,320 |
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Escrowed/Prerefunded
(continued) |
| Northeast
Ohio Regional Sewer District, Prerefunded to 5/15/23, 4.00%, 11/15/33(2) |
$
|
7,500
|
$
7,532,325 |
| Portland
Community College District, OR, Prerefunded to 6/15/23, 3.25%, 6/15/32(2) |
|
10,250
|
10,281,980
|
| Riverside
County Community College District, CA, (Election of 2004): |
|
|
|
| Prerefunded
to 2/1/25, 0.00%, 8/1/29 |
|
1,500
|
1,173,600
|
| Prerefunded
to 2/1/25, 0.00%, 8/1/30 |
|
1,250
|
929,450
|
| Rutgers
State University, NJ, Prerefunded to 5/1/23, 4.00%, 5/1/30(2) |
|
8,425
|
8,460,469
|
| San
Bernardino Community College District, CA, Prerefunded to 8/1/23, 4.00%, 8/1/30(2) |
|
10,000
|
10,089,300
|
| Savannah
Economic Development Authority, GA, (Marshes of Skidaway Island), Escrowed to Maturity, 6.00%, 1/1/24 |
|
85
|
87,604
|
| Scottsdale
Municipal Property Corp., AZ, Excise Tax Revenue: |
|
|
|
| Prerefunded
to 7/1/25, 4.00%, 7/1/30(2) |
|
2,000
|
2,083,440
|
| Prerefunded
to 7/1/25, 4.00%, 7/1/31(2) |
|
5,680
|
5,916,970
|
| Prerefunded
to 7/1/25, 4.00%, 7/1/32(2) |
|
2,120
|
2,208,446
|
| Tempe
Union High School District No. 213, AZ: |
|
|
|
| Prerefunded
to 7/1/23, 4.00%, 7/1/29(2) |
|
4,200
|
4,228,140
|
| Prerefunded
to 7/1/23, 4.00%, 7/1/30(2) |
|
4,350
|
4,379,145
|
| |
|
|
$ 69,281,672
|
| General
Obligations — 23.7% |
| Chicago
Board of Education, IL: |
|
|
|
| 5.00%,
12/1/26 |
$
|
3,000
|
$
3,121,620 |
| 5.00%,
12/1/27 |
|
500
|
524,200
|
| Clackamas
Community College District, OR: |
|
|
|
| 0.00%,
6/15/28 |
|
1,830
|
1,509,165
|
| 0.00%,
6/15/29 |
|
1,000
|
787,750
|
| Detroit,
MI, 5.00%, 4/1/27 |
|
1,700
|
1,788,995
|
| Illinois:
|
|
|
|
| 5.00%,
11/1/29 |
|
1,500
|
1,602,660
|
| 5.00%,
5/1/33 |
|
3,200
|
3,250,976
|
| 5.00%,
5/1/39 |
|
1,165
|
1,176,009
|
| Leander
Independent School District, TX, (PSF Guaranteed), 0.00%, 8/15/31 |
|
5,000
|
3,500,600
|
| Pennsylvania,
4.00%, 4/1/29(2) |
|
10,000
|
10,026,500
|
| Puerto
Rico, 5.625%, 7/1/27 |
|
2,000
|
2,097,220
|
| Texas,
(Texas Transportation Commission), 4.00%, 10/1/31(2) |
|
10,000
|
10,177,800
|
| Washington,
4.00%, 7/1/29(2) |
|
10,000
|
10,067,800
|
| |
|
|
$ 49,631,295
|
11
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Portfolio of
Investments — continued
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Hospital
— 13.2% |
| Bucks
County Industrial Development Authority, PA, (Grand View Hospital), 5.00%, 7/1/29 |
$
|
550
|
$
582,808 |
| California
Health Facilities Financing Authority, (Providence Health & Services), 4.00%, 10/1/28(2) |
|
10,000
|
10,213,500
|
| Illinois
Finance Authority, (Presence Health Network), 5.00%, 2/15/29 |
|
2,635
|
2,887,380
|
| New
York Dormitory Authority, (Orange Regional Medical Center): |
|
|
|
| 5.00%,
12/1/29(1) |
|
450
|
458,924
|
| 5.00%,
12/1/30(1) |
|
1,000
|
1,019,680
|
| Southeastern
Ohio Port Authority, (Memorial Health System Obligated Group), 5.50%, 12/1/29 |
|
985
|
1,007,507
|
| Tarrant
County Cultural Education Facilities Finance Corp., TX, (Baylor Health Care System), Prerefunded to 5/15/23, 4.00%, 11/15/32(2) |
|
10,000
|
10,044,500
|
| Yavapai
County Industrial Development Authority, AZ, (Yavapai Regional Medical Center), 5.00%, 8/1/28 |
|
1,500
|
1,511,400
|
| |
|
|
$ 27,725,699
|
| Industrial
Development Revenue — 13.0% |
| Boone
County, KY, (Duke Energy Kentucky, Inc.), 3.70%, 8/1/27 |
$
|
750
|
$
756,705 |
| Chandler
Industrial Development Authority, AZ, (Intel Corp.), (AMT), 5.00% to 9/1/27 (Put Date), 9/1/52 |
|
2,250
|
2,384,302
|
| Iowa
Finance Authority, (Iowa Fertilizer Co.), 4.00% to 12/1/32 (Put Date), 12/1/50 |
|
1,000
|
1,000,760
|
| Louisiana
Public Facilities Authority, (Cleco Power LLC), 4.25%, 12/1/38 |
|
2,395
|
2,347,148
|
| Matagorda
County Navigation District No. 1, TX, (AEP Texas Central Co.): |
|
|
|
| Series
2008-1, 4.00%, 6/1/30 |
|
540
|
540,832
|
| Series
2008-2, 4.00%, 6/1/30 |
|
3,000
|
3,004,620
|
| Michigan
Strategic Fund, (Graphic Packaging International, LLC), Green Bonds, (AMT), 4.00% to 10/1/26 (Put Date), 10/1/61 |
|
1,000
|
990,550
|
| National
Finance Authority, NH, (Covanta), (AMT), 4.00%, 11/1/27(1) |
|
2,500
|
2,403,500
|
| New
Jersey Economic Development Authority, (Continental Airlines), (AMT), 5.625%, 11/15/30 |
|
1,355
|
1,387,547
|
| New
York Transportation Development Corp., (Delta Air Lines, Inc. - LaGuardia Airport Terminals C&D Redevelopment): |
|
|
|
| (AMT),
4.00%, 10/1/30 |
|
3,000
|
3,013,410
|
| (AMT),
5.00%, 1/1/31 |
|
1,025
|
1,072,417
|
| Ohio
Air Quality Development Authority, (Duke Energy Corp.), 4.00% to 6/1/27 (Put Date), 9/1/30 |
|
1,000
|
1,023,100 |
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Industrial
Development Revenue (continued) |
| Ohio
Air Quality Development Authority, (Pratt Paper, LLC), (AMT), 3.75%, 1/15/28(1) |
$
|
780
|
$
778,237 |
| Public
Finance Authority, WI, (Celanese Corp.), 4.05%, 11/1/30 |
|
3,000
|
2,889,510
|
| Vermont
Economic Development Authority, (Casella Waste Systems, Inc.): |
|
|
|
| (AMT),
4.625% to 4/3/28 (Put Date), 4/1/36(1) |
|
105
|
103,736
|
| (AMT),
5.00% to 6/1/27 (Put Date), 6/1/52(1) |
|
1,500
|
1,508,730
|
| West
Virginia Economic Development Authority, (Appalachian Power Co.), 3.75% to 6/1/25 (Put Date), 12/1/42 |
|
2,000
|
2,005,020
|
| |
|
|
$ 27,210,124
|
| Insured
- Electric Utilities — 2.7% |
| Puerto
Rico Electric Power Authority: |
|
|
|
| (NPFG),
5.25%, 7/1/29 |
$
|
500
|
$
506,760 |
| (NPFG),
5.25%, 7/1/30 |
|
5,000
|
5,060,950
|
| |
|
|
$ 5,567,710
|
| Insured
- General Obligations — 3.2% |
| Chicago
Board of Education, IL, (AGM), 5.00%, 12/1/28 |
$
|
250
|
$
271,832 |
| Grossmont
Union High School District, CA, (Election of 2008), (AGM), 0.00%, 8/1/29 |
|
4,000
|
3,106,640
|
| Luzerne
County, PA, (AGM), 5.00%, 11/15/29 |
|
2,000
|
2,126,560
|
| McHenry
County Community Unit School District No. 12, IL, (AGM), 4.25%, 1/1/29 |
|
1,230
|
1,252,829
|
| |
|
|
$ 6,757,861
|
| Insured
- Transportation — 4.7% |
| Foothill/Eastern
Transportation Corridor Agency, CA, (AGM), 5.625%, (0.00% until 1/15/24), 1/15/32 |
$
|
795
|
$
911,452 |
| New
Jersey Economic Development Authority, (The Goethals Bridge Replacement), (AGM), (AMT), 5.00%, 1/1/31 |
|
1,340
|
1,358,720
|
| New
Jersey Transportation Trust Fund Authority, (Transportation System), (AMBAC), 0.00%, 12/15/28 |
|
9,095
|
7,575,589
|
| |
|
|
$ 9,845,761
|
| Insured
- Water and Sewer — 2.6% |
| Jefferson
County, AL, Sewer Revenue: |
|
|
|
| (AGM),
0.00%, 10/1/27 |
$
|
875
|
$
708,418 |
| (AGM),
0.00%, 10/1/29 |
|
1,225
|
868,341
|
| (AGM),
0.00%, 10/1/30 |
|
1,045
|
690,609
|
| (AGM),
0.00%, 10/1/33 |
|
5,870
|
3,172,441
|
| |
|
|
$ 5,439,809
|
12
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Portfolio of
Investments — continued
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Lease
Revenue/Certificates of Participation — 2.1% |
| Michigan
Strategic Fund, (Facility for Rare Isotope Beams), 4.00%, 3/1/31 |
$
|
1,000
|
$
1,016,750 |
| New
Jersey Economic Development Authority, (School Facilities Construction), 5.00%, 6/15/28 |
|
3,000
|
3,351,360
|
| |
|
|
$ 4,368,110
|
| Other
Revenue — 3.3% |
| Black
Belt Energy Gas District, AL, 4.00% to 12/1/26 (Put Date), 10/1/52 |
$
|
1,250
|
$
1,252,525 |
| Buckeye
Tobacco Settlement Financing Authority, OH, 5.00%, 6/1/32 |
|
2,000
|
2,199,080
|
| California
Community Choice Financing Authority, Clean Energy Project Revenue, Green Bonds, 5.00% to 8/1/29 (Put Date), 12/1/53 |
|
1,000
|
1,068,210
|
| Kalispel
Tribe of Indians, WA, Series A, 5.00%, 1/1/32(1) |
|
695
|
726,428
|
| Main
Street Natural Gas, Inc., GA, Gas Supply Revenue, 5.00% to 6/1/30 (Put Date), 6/1/53(3) |
|
1,650
|
1,752,283
|
| |
|
|
$ 6,998,526
|
| Senior
Living/Life Care — 8.8% |
| Bexar
County Health Facilities Development Corp., TX, (Army Retirement Residence Foundation), 5.00%, 7/15/28 |
$
|
225
|
$
226,058 |
| Buffalo
and Erie County Industrial Land Development Corp., NY, (Orchard Park CCRC, Inc.), 5.00%, 11/15/28 |
|
1,360
|
1,394,354
|
| Colorado
Health Facilities Authority, (Frasier Meadows Retirement Community): |
|
|
|
| 5.25%,
5/15/28 |
|
250
|
253,132
|
| Prerefunded
to 5/15/23, 5.00%, 5/15/30 |
|
410
|
412,747
|
| Franklin
County Industrial Development Authority, PA, (Menno-Haven, Inc.): |
|
|
|
| 5.00%,
12/1/27 |
|
250
|
240,032
|
| 5.00%,
12/1/28 |
|
250
|
238,302
|
| Harris
County Cultural Education Facilities Finance Corp., TX, (Brazos Presbyterian Homes, Inc.), 5.75%, 1/1/28 |
|
140
|
140,116
|
| Lancaster
County Hospital Authority, PA, (Brethren Village), 5.00%, 7/1/30 |
|
1,025
|
1,008,139
|
| Massachusetts
Development Finance Agency, (Linden Ponds, Inc.), 5.00%, 11/15/28(1) |
|
300
|
319,932
|
| Montgomery
County Industrial Development Authority, PA, (Whitemarsh Continuing Care Retirement Community), 4.25%, 1/1/28 |
|
2,300
|
2,221,685
|
| Multnomah
County Hospital Facilities Authority, OR, (Mirabella at South Waterfront), 5.125%, 10/1/34 |
|
1,500
|
1,503,090
|
| New
Hope Cultural Education Facilities Finance Corp., TX, (Longhorn Village), 5.00%, 1/1/28 |
|
1,145
|
1,151,412 |
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Senior
Living/Life Care (continued) |
| North
Carolina Medical Care Commission, (Galloway Ridge), 5.00%, 1/1/29 |
$
|
560
|
$
550,144 |
| Public
Finance Authority, WI, (Church Home of Hartford, Inc.), 5.00%, 9/1/25(1) |
|
750
|
748,530
|
| Rockville,
MD, (Ingleside at King Farm), 5.00%, 11/1/29 |
|
1,100
|
1,091,222
|
| St.
Louis County Industrial Development Authority, MO, (Friendship Village St. Louis Obligated Group), 5.00%, 9/1/28 |
|
635
|
648,602
|
| Tarrant
County Cultural Education Facilities Finance Corp., TX, (MRC Stevenson Oaks), 6.25%, 11/15/31 |
|
540
|
535,626
|
| Tarrant
County Cultural Education Facilities Finance Corp., TX, (Trinity Terrace), 5.00%, 10/1/29 |
|
1,045
|
1,060,874
|
| Tempe
Industrial Development Authority, AZ, (Mirabella at ASU), 5.50%, 10/1/27(1) |
|
900
|
872,964
|
| Tulsa
County Industrial Authority, OK, (Montereau, Inc.), 5.00%, 11/15/26 |
|
345
|
355,398
|
| Vermont
Economic Development Authority, (Wake Robin Corp.): |
|
|
|
| 5.00%,
5/1/27 |
|
500
|
502,045
|
| 5.00%,
5/1/28 |
|
750
|
750,225
|
| Warren
County, OH, (Otterbein Homes Obligated Group), 5.00%, 7/1/28 |
|
1,200
|
1,212,444
|
| Washington
Housing Finance Commission, (Bayview Manor Homes), 5.00%, 7/1/31(1) |
|
1,000
|
951,750
|
| |
|
|
$ 18,388,823
|
| Special
Tax Revenue — 13.1% |
| Bullhead
City, AZ, Excise Taxes Revenue, 1.30%, 7/1/28 |
$
|
485
|
$
445,278 |
| Lakewood
Ranch Stewardship District, FL, (Villages of Lakewood Ranch), 4.25%, 5/1/26 |
|
970
|
970,698
|
| Metropolitan
Development and Housing Agency, TN, (Fifth + Broadway Development), 4.50%, 6/1/28(1) |
|
705
|
712,029
|
| Metropolitan
Pier and Exposition Authority, IL, (McCormick Place Expansion), 5.00%, 12/15/27 |
|
1,000
|
1,051,810
|
| Michigan
Finance Authority, Detroit Financial Recovery Income Tax Revenue, 4.50%, 10/1/29 |
|
895
|
904,201
|
| New
York Dormitory Authority, Sales Tax Revenue, 4.00%, 3/15/30(2) |
|
10,000
|
10,016,100
|
| New
York State Urban Development Corp., Personal Income Tax Revenue, 5.00%, 3/15/30(2) |
|
12,000
|
12,334,200
|
| Sparks,
NV, (Legends at Sparks Marina), 2.75%, 6/15/28(1) |
|
1,000
|
909,920
|
| |
|
|
$ 27,344,236
|
| Student
Loan — 1.9% |
| Massachusetts
Educational Financing Authority, (AMT), 5.00%, 1/1/27 |
$
|
3,000
|
$
3,100,320 |
13
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Portfolio of
Investments — continued
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| Student
Loan (continued) |
| New
Jersey Higher Education Student Assistance Authority: |
|
|
|
| Series
2013-1A, (AMT), 4.00%, 12/1/28 |
$
|
360
|
$
360,061 |
| Series
2015-1A, (AMT), 4.00%, 12/1/28 |
|
505
|
506,636
|
| |
|
|
$ 3,967,017
|
| Transportation
— 13.7% |
| Foothill/Eastern
Transportation Corridor Agency, CA, 5.90%, (0.00% until 1/15/24), 1/15/27 |
$
|
2,000
|
$
2,070,300 |
| Grand
Parkway Transportation Corp., TX: |
|
|
|
| 4.95%,
(0.00% until 10/1/23), 10/1/29 |
|
800
|
884,544
|
| 5.05%,
(0.00% until 10/1/23), 10/1/30 |
|
1,500
|
1,662,930
|
| 5.20%,
(0.00% until 10/1/23), 10/1/31 |
|
2,000
|
2,227,000
|
| Houston,
TX, (United Airlines, Inc.), (AMT), 5.00%, 7/1/29 |
|
1,470
|
1,485,685
|
| Kentucky
Public Transportation Infrastructure Authority, (Downtown Crossing Project), Prerefunded to 7/1/23, 0.00%, 7/1/28 |
|
1,240
|
900,116
|
| Metropolitan
Transportation Authority, NY, 5.00% to 5/15/30 (Put Date), 11/15/45 |
|
2,250
|
2,460,735
|
| New
Jersey Economic Development Authority, (Portal North Bridge), 5.00%, 11/1/32 |
|
675
|
794,212
|
| New
York Transportation Development Corp., (LaGuardia Airport Terminal B Redevelopment), (AMT), 5.00%, 7/1/34 |
|
4,000
|
4,073,560
|
| New
York Transportation Development Corp., (Terminal 4 John F. Kennedy International Airport), (AMT), 5.00%, 12/1/29 |
|
2,000
|
2,190,160
|
| Port
Authority of New York and New Jersey, (AMT), 4.00%, 7/15/36(2) |
|
10,000
|
10,002,200
|
| |
|
|
$ 28,751,442
|
| Water
and Sewer — 2.5% |
| Michigan
Finance Authority, (Detroit Water and Sewerage Department), 5.00%, 7/1/30 |
$
|
5,000
|
$
5,148,150 |
| |
|
|
$ 5,148,150
|
Total
Tax-Exempt Municipal Obligations
(identified cost $293,590,347) |
|
|
$ 299,882,183
|
| Taxable
Municipal Obligations — 4.2% |
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| General
Obligations — 2.4% |
| Atlantic
City, NJ, 7.00%, 3/1/28 |
$
|
2,105
|
$ 2,209,998
|
| Security
|
Principal
Amount
(000's omitted) |
Value
|
| General
Obligations (continued) |
| Chicago,
IL: |
|
|
|
| 7.375%,
1/1/33 |
$
|
1,000
|
$
1,090,450 |
| 7.781%,
1/1/35 |
|
1,675
|
1,867,340
|
| |
|
|
$ 5,167,788
|
| Insured
- Transportation — 1.8% |
| Alameda
Corridor Transportation Authority, CA, (AMBAC), 0.00%, 10/1/31 |
$
|
5,805
|
$
3,720,889 |
| |
|
|
$ 3,720,889
|
Total
Taxable Municipal Obligations
(identified cost $8,829,191) |
|
|
$ 8,888,677
|
Total
Investments — 148.6%
(identified cost $304,897,038) |
|
|
$ 311,153,510
|
| Other
Assets, Less Liabilities — (48.6)% |
|
|
$
(101,811,187) |
| Net
Assets — 100.0% |
|
|
$ 209,342,323
|
| The
percentage shown for each investment category in the Portfolio of Investments is based on net assets. |
|
(1) |
Security
exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be sold in certain transactions in reliance on an exemption from registration (normally to qualified institutional buyers). At January 31,
2023, the aggregate value of these securities is $13,198,007 or 6.3% of the Trust's net assets. |
|
(2) |
Security
represents the municipal bond held by a trust that issues residual interest bonds (see Note 1G). |
|
(3) |
When-issued
security. |
| At
January 31, 2023, the concentration of the Trust’s investments in the various states and territories, determined as a percentage of total investments, is as follows: |
| New
York |
15.4%
|
| California
|
12.6%
|
| Texas
|
11.8%
|
| Others,
representing less than 10% individually |
59.4%
|
| The
Trust invests primarily in debt securities issued by municipalities. The ability of the issuers of the debt securities to meet their obligations may be affected by economic developments in a specific industry or municipality. At January 31, 2023,
10.1% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution or financial guaranty assurance agency
ranged from 1.8% to 4.6% of total investments. |
14
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Portfolio of
Investments — continued
| Abbreviations:
|
| 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. |
| NPFG
|
– National
Public Finance Guarantee Corp. |
| PSF
|
– Permanent
School Fund |
15
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Statement of Assets
and Liabilities
| |
January
31, 2023 |
| Assets
|
|
| Investments, at value (identified cost $304,897,038)
|
$
311,153,510 |
| Interest receivable
|
2,507,376
|
| Receivable
for investments sold |
300,000
|
| Total
assets |
$313,960,886
|
| Liabilities
|
|
| Payable
for floating rate notes issued |
$
101,446,995 |
| Payable
for when-issued securities |
1,737,681
|
| Due
to custodian |
374,429
|
| Payable
to affiliate: |
|
| Investment adviser and administration fee
|
157,836
|
| Interest
expense and fees payable |
765,682
|
| Accrued
expenses |
135,940
|
| Total
liabilities |
$104,618,563
|
| Net
Assets |
$209,342,323
|
| Sources
of Net Assets |
|
| Common
shares, $0.01 par value, unlimited number of shares authorized |
$
108,850 |
| Additional
paid-in capital |
207,837,559
|
| Distributable
earnings |
1,395,914
|
| Net
Assets |
$209,342,323
|
| Common
Shares Issued and Outstanding |
10,884,956
|
| Net
Asset Value Per Common Share |
|
| Net
assets ÷ common shares issued and outstanding |
$
19.23 |
16
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
| |
Year
Ended |
| |
January
31, 2023 |
| Investment
Income |
|
| Interest
income |
$
12,466,550 |
| Total investment income
|
$
12,466,550 |
| Expenses
|
|
| Investment
adviser and administration fee |
$
1,965,021 |
| Trustees’
fees and expenses |
22,747
|
| Custodian
fee |
52,610
|
| Transfer
and dividend disbursing agent fees |
18,910
|
| Legal
and accounting services |
80,564
|
| Printing
and postage |
4,638
|
| Interest
expense and fees |
2,247,427
|
| Miscellaneous
|
48,293
|
| Total
expenses |
$
4,440,210 |
| Net
investment income |
$
8,026,340 |
| Realized
and Unrealized Gain (Loss) |
|
| Net
realized gain (loss): |
|
| Investment
transactions |
$
(1,462,236) |
| Net
realized loss |
$
(1,462,236) |
| Change
in unrealized appreciation (depreciation): |
|
| Investments
|
$
(14,951,568) |
| Net
change in unrealized appreciation (depreciation) |
$(14,951,568)
|
| Net
realized and unrealized loss |
$(16,413,804)
|
| Net
decrease in net assets from operations |
$
(8,387,464) |
17
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Statements of Changes
in Net Assets
| |
Year
Ended January 31, |
| |
2023
|
2022
|
| Increase
(Decrease) in Net Assets |
|
|
| From
operations: |
|
|
| Net
investment income |
$
8,026,340 |
$
9,451,773 |
| Net
realized gain (loss) |
(1,462,236)
|
722,043
|
| Net
change in unrealized appreciation (depreciation) |
(14,951,568)
|
(13,385,838)
|
| Net
decrease in net assets from operations |
$
(8,387,464) |
$
(3,212,022) |
| Distributions
to shareholders |
$
(8,854,966) |
$
(9,240,905) |
| Capital share transactions:
|
|
|
| Reinvestment
of distributions |
$
297,741 |
$
376,356 |
| Net
increase in net assets from capital share transactions |
$
297,741 |
$
376,356 |
| Net
decrease in net assets |
$
(16,944,689) |
$
(12,076,571) |
| Net
Assets |
|
|
| At
beginning of year |
$
226,287,012 |
$
238,363,583 |
| At
end of year |
$209,342,323
|
$226,287,012
|
18
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
| |
Year
Ended |
| |
January
31, 2023 |
| Cash
Flows From Operating Activities |
|
| Net
decrease in net assets from operations |
$
(8,387,464) |
| Adjustments
to reconcile net decrease in net assets from operations to net cash provided by operating activities: |
|
| Investments
purchased |
(54,351,554)
|
| Investments
sold |
64,819,525
|
| Net
amortization/accretion of premium (discount) |
(354,942)
|
| Decrease
in interest receivable |
193,687
|
| Decrease
in payable to affiliate for investment adviser and administration fee |
(22,319)
|
| Increase
in interest expense and fees payable |
575,121
|
| Increase
in accrued expenses |
41,274
|
| Net
change in unrealized (appreciation) depreciation from investments |
14,951,568
|
| Net
realized loss from investments |
1,462,236
|
| Net
cash provided by operating activities |
$
18,927,132 |
| Cash
Flows From Financing Activities |
|
| Cash
distributions paid |
$
(8,557,225) |
| Repayment
of secured borrowings |
(22,000,000)
|
| Increase
in due to custodian |
374,429
|
| Net
cash used in financing activities |
$(30,182,796)
|
| Net
decrease in cash |
$(11,255,664)
|
| Cash
at beginning of year |
$
11,255,664 |
| Cash
at end of year |
$
— |
| Supplemental
disclosure of cash flow information: |
|
| Noncash
financing activities not included herein consist of: |
|
| Reinvestment
of dividends and distributions |
$
297,741 |
| Cash
paid for interest and fees on borrowings |
1,672,306
|
19
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
| |
Year
Ended January 31, |
| |
2023
|
2022
|
2021
|
2020
|
2019
|
| Net
asset value — Beginning of year |
$
20.820 |
$
21.960 |
$
21.880 |
$
20.440 |
$
20.440 |
| Income
(Loss) From Operations |
|
|
|
|
|
| Net
investment income(1) |
$
0.738 |
$
0.870 |
$
0.876 |
$
0.763 |
$
0.775 |
| Net
realized and unrealized gain (loss) |
(1.514)
|
(1.159)
|
0.048
|
1.528
|
0.076
|
| Total
income (loss) from operations |
$
(0.776) |
$
(0.289) |
$
0.924 |
$
2.291 |
$
0.851 |
| Less
Distributions |
|
|
|
|
|
| From
net investment income |
$
(0.814) |
$
(0.851) |
$
(0.844) |
$
(0.851) |
$
(0.851) |
| Total
distributions |
$
(0.814) |
$
(0.851) |
$
(0.844) |
$
(0.851) |
$
(0.851) |
| Net
asset value — End of year |
$
19.230 |
$
20.820 |
$
21.960 |
$
21.880 |
$
20.440 |
| Market
value — End of year |
$
18.520 |
$
20.510 |
$
22.950 |
$
21.370 |
$
19.590 |
| Total
Investment Return on Net Asset Value(2) |
(3.66)%
|
(1.39)%
|
4.45%
|
11.46%
|
4.46%
|
| Total
Investment Return on Market Value(2) |
(5.82)%
|
(7.03)%
|
11.74%
|
13.58%
|
3.93%
|
| Ratios/Supplemental
Data |
|
|
|
|
|
| Net
assets, end of year (000’s omitted) |
$209,342
|
$226,287
|
$238,364
|
$237,212
|
$221,444
|
| Ratios
(as a percentage of average daily net assets): |
|
|
|
|
|
| Expenses excluding interest and fees
|
1.04%
|
1.03%
|
1.04%
|
1.04%
|
1.08%
|
| Interest
and fee expense(3) |
1.06%
|
0.33%
|
0.63%
|
1.16%
|
1.22%
|
| Total
expenses |
2.10%
|
1.36%
|
1.67%
|
2.20%
|
2.30%
|
| Net
investment income |
3.79%
|
4.02%
|
4.10%
|
3.58%
|
3.84%
|
| Portfolio
Turnover |
16%
|
2%
|
3%
|
1%
|
10%
|
|
(1) |
Computed
using average shares outstanding. |
|
(2) |
Returns
are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Trust’s dividend reinvestment
plan. |
|
(3) |
Interest
and fee expense relates to the liability for floating rate notes issued in conjunction with residual interest bond transactions (see Note 1G). |
20
See Notes to Financial Statements.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Notes to Financial
Statements
1 Significant Accounting Policies
Eaton Vance Municipal Income 2028 Term Trust (the Trust) is a
Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, closed-end management investment company. The Trust's investment objective is to provide current income exempt from
regular federal income tax. The Trust has a term of fifteen years and currently intends to cease its investment operations on or about June 30, 2028 (the "Termination Date") and thereafter liquidate and distribute its net assets to holders of the
Trust’s common shares. The Trust's term may be extended for a period of not more than 12 months from the Termination Date by a vote of the Trust's Board of Trustees, if the Board determines it is in the best interest of the common shareholders
to do so. The Trust's term may not be extended further than a 12 month period without a common shareholder vote.
The following is a summary of significant accounting policies
of the Trust. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Trust 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.
Fair Valuation. In connection
with Rule 2a-5 of the 1940 Act, the Trustees have designated the Trust’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 Trust 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.
C Federal
Taxes—The Trust’s policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute to shareholders each year 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 Trust 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 Trust, as exempt-interest dividends. The portion of such interest, if any, earned on private activity bonds issued after August 7, 1986, may be considered a tax preference item to
shareholders.
As of January 31, 2023, the Trust
had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Trust 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 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.
E Use of
Estimates—The preparation of the financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those
estimates.
F Indemnifications—Under the Trust’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Trust. 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 Trust shareholders and the By-laws provide that the Trust shall assume, upon request by the
shareholder, the defense on behalf of any Trust shareholders. Moreover, the By-laws also provide for indemnification out of Trust property of any shareholder held personally
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Notes to Financial
Statements — continued
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 Trust enters into agreements with service providers that may contain indemnification clauses.
The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred.
G Floating Rate Notes Issued in Conjunction with
Securities Held—The Trust may invest in residual interest bonds, also referred to as inverse floating
rate securities, whereby the Trust 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 Trust, and which may have been, but is not required to be, the bond purchased from the Trust(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 Trust gives the Trust 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 Trust, thereby terminating the SPV. Should the Trust 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 Trust 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 6) at January 31, 2023. Interest expense related to the Trust's liability with respect to Floating
Rate Notes is recorded as incurred. The SPV may be terminated by the Trust, 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, 2023, the amount of the Trust’s Floating Rate Notes outstanding and the related collateral were $101,446,995 and $138,062,815,
respectively. The range of interest rates on the Floating Rate Notes outstanding at January 31, 2023 was 1.66% to 1.74%. For the year ended January 31, 2023, the Trust’s average settled Floating Rate Notes outstanding and the average interest
rate including fees were $115,062,397 and 1.95%, respectively.
In certain circumstances, the Trust may enter into shortfall
and forbearance agreements with brokers by which the Trust 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 Trust had no shortfalls as of January 31, 2023.
The Trust 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 Trust’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 Trust’s investment policies do not allow the Trust to borrow money except as permitted by the 1940 Act. Effective August 19, 2022, the Trust 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 Trust has elected to comply with the asset coverage
requirements of Section 18 with respect to its investments in residual interest bonds (as opposed to treating such interests as derivatives transactions). The Trust may change this election (and elect to treat these investments and other similar
financing transactions as derivatives transactions) at any time. Residual interest bonds held by the Trust are securities exempt from registration under Rule 144A of the Securities Act of 1933.
H When-Issued Securities and Delayed Delivery
Transactions—The Trust 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 Trust 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 Trust intends to make monthly
distributions of net investment income to common shareholders. In addition, at least annually, the Trust intends to distribute all or substantially all of its net realized capital gains. Distributions are recorded on the ex-dividend date.
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.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Notes to Financial
Statements — continued
The
tax character of distributions declared for the years ended January 31, 2023 and January 31, 2022 was as follows:
| |
Year
Ended January 31, |
| |
2023
|
2022
|
| Tax-exempt
income |
$8,390,455
|
$8,709,110
|
| Ordinary
income |
$
464,511 |
$
531,795 |
As of January 31, 2023, the components of distributable
earnings (accumulated loss) on a tax basis were as follows:
| Undistributed
tax-exempt income |
$
129,807 |
| Deferred
capital losses |
(5,642,416)
|
| Net
unrealized appreciation |
6,908,523
|
| Distributable
earnings |
$
1,395,914 |
At January 31, 2023, the Trust, for federal income tax
purposes, had deferred capital losses of $5,642,416 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 Trust of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Trust’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, 2023, $5,642,416 are short-term.
| Aggregate
cost |
$202,797,992
|
| Gross
unrealized appreciation |
$
7,919,210 |
| Gross
unrealized depreciation |
(1,010,687)
|
| Net
unrealized appreciation |
$
6,908,523 |
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 Trust. The fee is computed at an annual
rate of 0.60% of the Trust’s average daily total managed assets and is payable monthly. For purposes of this calculation, total managed assets means total assets of the Trust, including any form of investment leverage, minus all accrued
expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit
facility or the issuance of debt securities or through the purchase of residual interest bonds), (ii) the issuance of preferred stock or other similar preference securities, (iii) the reinvestment of collateral received for securities loaned in
accordance with the Trust’s investment objectives and policies, and/or (iv) any other means, all as determined in accordance with generally accepted accounting principles. Accrued expenses includes other liabilities other than indebtedness
attributable to leverage. For the year ended January 31, 2023, the investment adviser and administration fee was $1,965,021.
Trustees and officers of the Trust who are members of
EVM’s organization receive remuneration for their services to the Trust out of the investment adviser and administration fee. Trustees of the Trust who are not affiliated with EVM may elect to defer receipt of all or a percentage of their
annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the year ended January 31, 2023, no significant amounts have been deferred. Certain officers and Trustees of the Trust are officers of EVM.
4 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term
obligations and including maturities, aggregated $53,218,835 and $65,119,525, respectively, for the year ended January 31, 2023.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Notes to Financial
Statements — continued
5 Common Shares of Beneficial Interest
The Trust may issue common shares pursuant to its dividend
reinvestment plan. Common shares issued by the Trust pursuant to its dividend reinvestment plan for the years ended January 31, 2023 and January 31, 2022 were 15,208 and 17,328, respectively.
In November 2013, the Board of Trustees initially approved a
share repurchase program for the Trust. Pursuant to the reauthorization of the share repurchase program by the Board of Trustees in March 2019, the Trust is authorized to repurchase up to 10% of its common shares outstanding as of the last day of
the prior calendar year at market prices when shares are trading at a discount to net asset value. The share repurchase program does not obligate the Trust to purchase a specific amount of shares. There were no repurchases of common shares by the
Trust for the years ended January 31, 2023 and January 31, 2022.
6 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, 2023, the hierarchy of inputs used in valuing
the Trust's investments, which are carried at value, were as follows:
| Asset
Description |
Level
1 |
Level
2 |
Level
3 |
Total
|
| Corporate
Bonds |
$
— |
$
2,382,650 |
$
— |
$
2,382,650 |
| Tax-Exempt
Municipal Obligations |
—
|
299,882,183
|
—
|
299,882,183
|
| Taxable
Municipal Obligations |
—
|
8,888,677
|
—
|
8,888,677
|
| Total
Investments |
$ —
|
$311,153,510
|
$ —
|
$311,153,510
|
7 Risks and
Uncertainties
Pandemic Risk
An outbreak of respiratory disease caused by a novel
coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines,
cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and
economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and industries, and could continue to affect the market
in significant and unforeseen ways. Other epidemics and pandemics that may arise in the future may have similar effects. Any such impact could adversely affect the Trust's performance, or the performance of the securities in which the Trust
invests.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Report of Independent
Registered Public Accounting Firm
To the
Trustees and Shareholders of Eaton Vance Municipal Income 2028 Term Trust:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying statement of
assets and liabilities of Eaton Vance Municipal Income 2028 Term Trust (the “Trust”), including the portfolio of investments, as of January 31, 2023, the related statements of operations and cash flows for the year then ended, the
statements of changes in net assets for each of the two years in the period then ended, 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 Trust as of January 31, 2023, and the results of its operations and its cash flows 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 Trust's management. Our responsibility is to express an opinion on the Trust'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 Trust 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
Trust 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 Trust’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, 2023, 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 22, 2023
We have served as the auditor of one or
more Eaton Vance investment companies since 1959.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Federal Tax
Information (Unaudited)
The
Form 1099-DIV you receive in February 2024 will show the tax status of all distributions paid to your account in calendar year 2023. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their
investment in the Trust. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding exempt-interest dividends.
Exempt-Interest Dividends. For
the fiscal year ended January 31, 2023, the Trust designates 94.75% of distributions from net investment income as an exempt-interest dividends.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Annual Meeting of
Shareholders (Unaudited)
The
Trust held its Annual Meeting of Shareholders on November 10, 2022. The following action was taken by the shareholders
Proposal 1: The election of Thomas E. Faust Jr., Cynthia E.
Frost, Scott E. Wennerholm and Nancy A. Wiser as Class I Trustees of the Trust for a three-year term expiring in 2025.
| |
|
|
Number
of Shares |
| Nominees
for Trustee |
|
|
For
|
Withheld
|
| Thomas
E. Faust Jr. |
|
|
9,429,570
|
122,896
|
| Cynthia
E. Frost |
|
|
9,459,200
|
93,266
|
| Scott
E. Wennerholm |
|
|
9,455,867
|
96,599
|
| Nancy
A. Wiser |
|
|
9,439,994
|
112,472
|
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Dividend Reinvestment
Plan
The Trust offers a dividend reinvestment plan (Plan) pursuant
to which shareholders automatically have distributions reinvested in common shares (Shares) of the Trust unless they elect otherwise through their investment dealer. On the distribution payment date, if the NAV per Share is equal to or less than the
market price per Share plus estimated brokerage commissions, then new Shares will be issued. The number of Shares shall be determined by the greater of the NAV per Share or 95% of the market price. Otherwise, Shares generally will be purchased on
the open market by American Stock Transfer & Trust Company, LLC, the Plan agent (Agent). Distributions subject to income tax (if any) are taxable whether or not Shares are reinvested.
If your Shares are in the name of a brokerage firm, bank, or
other nominee, you can ask the firm or nominee to participate in the Plan on your behalf. If the nominee does not offer the Plan, you will need to request that the Trust’s transfer agent re-register your Shares in your name or you will not be
able to participate.
The Agent’s service fee for
handling distributions will be paid by the Trust. Plan participants will be charged their pro rata share of brokerage commissions on all open-market purchases.
Plan participants may withdraw from the Plan at any time by
writing to the Agent at the address noted on the following page. If you withdraw, you will receive Shares in your name for all Shares credited to your account under the Plan. If a participant elects by written notice to the Agent to sell part or all
of his or her Shares and remit the proceeds, the Agent is authorized to deduct a $5.00 fee plus brokerage commissions from the proceeds.
If you wish to participate in the Plan and your Shares are held
in your own name, you may complete the form on the following page and deliver it to the Agent. Any inquiries regarding the Plan can be directed to the Agent at 1-866-439-6787.
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Application for
Participation in Dividend Reinvestment Plan
This form is for shareholders who hold
their common shares in their own names. If your common shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it will participate in the Plan on your behalf. If you wish to participate in
the Plan, but your brokerage firm, bank, or nominee is unable to participate on your behalf, you should request that your common shares be re-registered in your own name which will enable your participation in the Plan.
The following authorization and appointment
is given with the understanding that I may terminate it at any time by terminating my participation in the Plan as provided in the terms and conditions of the Plan.
| |
| Please
print exact name on account |
|
| |
| Shareholder
signature |
Date
|
| |
| Shareholder
signature |
Date
|
| Please
sign exactly as your common shares are registered. All persons whose names appear on the share certificate must sign. |
YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO
RECEIVE YOUR DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.
This authorization form, when signed, should
be mailed to the following address:
Eaton Vance Municipal Income 2028 Term
Trust
c/o American Stock Transfer & Trust Company, LLC
P.O. Box 922
Wall Street Station
New York, NY 10269-0560
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Management and
Organization
Fund
Management. The Board of Trustees of the Fund (the “Board”) is responsible for the overall management and supervision of the affairs of the Fund. The Board members and officers of the Fund 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. Each Trustee holds office until the annual meeting for the year in which his or her term expires and 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 Securities and Exchange Commission, 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 Fund, as that term is defined under the 1940 Act. The business address of each Board
member and officer is Two International Place, Boston, Massachusetts 02110. As used below, “BMR” refers to Boston Management and Research, “EVC” refers to Eaton Vance Corp., “EV” refers to EV LLC,
“EVM” refers to Eaton Vance Management and “EVD” refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. Effective March 1, 2021, 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 130 funds in the Eaton Vance fund complex (including both funds
and portfolios in a hub and spoke structure).
| Name
and Year of Birth |
Fund
Position(s) |
Length
of Service |
Principal
Occupation(s) and Other Directorships
During Past Five Years and Other Relevant Experience |
| Interested Trustee
|
Thomas
E. Faust Jr.
1958 |
Class
I
Trustee |
Until
2025.
3 years.
Since 2007. |
Chairman
of Morgan Stanley Investment Management, Inc. (MSIM), member of the Board of Managers and President of EV (since 2021), Chief Executive Officer of EVM and BMR. Formerly, Chairman, Chief Executive Officer (2007-2021) and President (2006-2021) of EVC
and Director of EVD (2007-2022). Mr. Faust is an interested person because of his positions with MSIM, BMR, EVM and EV, which are affiliates of the Fund.
Other Directorships. Formerly, Director of EVC
(2007-2021) and Hexavest Inc. (investment management firm) (2012-2021). |
| Noninterested Trustees
|
Alan
C. Bowser(1)
1962 |
Class
II
Trustee |
Until
2023.
3 years.
Since 2023. |
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. None. |
Mark
R. Fetting
1954 |
Class
III
Trustee |
Until
2024.
3 years.
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 |
Class
I
Trustee |
Until
2025.
3 years.
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 Class II
Trustee |
Until
2023.
3 years. Chairperson of the Board since 2021 and Trustee since 2014. |
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. |
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Management and
Organization — continued
| Name
and Year of Birth |
Fund
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 |
Class
III
Trustee |
Until
2024.
3 years.
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 |
Class
III
Trustee |
Until
2024.
3 years.
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 |
Class
II
Trustee |
Until
2023.
3 years.
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 |
Class
II
Trustee |
Until
2023.
3 years.
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 |
Class
I
Trustee |
Until
2025.
3 years.
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(2)
1967 |
Class
I
Trustee |
Until
2025.
3 years.
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 |
Fund
Position(s) |
Length
of Service |
Principal
Occupation(s)
During Past Five Years |
| Principal
Officers who are not Trustees |
Eric
A. Stein
1980 |
President
|
Since
2020 |
Vice
President and Chief Investment Officer, Fixed Income of EVM and BMR. Prior to November 1, 2020, Mr. Stein was a co-Director of Eaton Vance’s Global Income Investments. Also Vice President of Calvert Research and Management (“CRM”).
|
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. |
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Management and
Organization — continued
| Name
and Year of Birth |
Fund
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. |
Richard
F. Froio
1968 |
Chief
Compliance
Officer |
Since
2017 |
Vice
President of EVM and BMR since 2017. Formerly, Deputy Chief Compliance Officer (Adviser/Funds) and Chief Compliance Officer (Distribution) at PIMCO (2012-2017) and Managing Director at BlackRock/Barclays Global Investors (2009-2012).
|
(1) Mr. Bowser began serving as a Trustee effective January 4, 2023.
(2) Ms. Wiser began serving as a Trustee effective April 4, 2022.
| 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 |
| Privacy
Notice — continued |
April 2021
|
| 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. |
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Potential Conflicts of
Interest
As a
diversified global financial services firm, Morgan Stanley engages in a broad spectrum of activities, including financial advisory services, investment management activities, lending, commercial banking, sponsoring and managing private investment
funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its business, Morgan Stanley is a full-service investment
banking and financial services firm and therefore engages in activities where Morgan Stanley’s interests or the interests of its clients may conflict with the interests of a Fund or Portfolio, if applicable, (collectively for the purposes of
this section, “Fund” or “Funds”). Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with the Morgan Stanley funds,
any new or successor funds, programs, accounts or businesses (other than funds, programs, accounts or businesses sponsored, managed, or advised by former direct or indirect subsidiaries of Eaton Vance Corp. (“Eaton Vance Investment
Accounts”)), the ‘‘MS Investment Accounts, and, together with the Eaton Vance Investment Accounts, the “Affiliated Investment Accounts’’) with a wide variety of investment objectives that in some instances may
overlap or conflict with a Fund’s investment objectives and present conflicts of interest. In addition, Morgan Stanley or the investment adviser may also from time to time create new or successor Affiliated Investment Accounts that may compete
with a Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and,
in fact, they may not be. Conflicts of interest not described below may also exist.
The discussions below with respect to actual, apparent and
potential conflicts of interest also may be applicable to or arise from the MS Investment Accounts whether or not specifically identified.
Material Non-public and Other Information. It is expected that confidential or material non-public information regarding an investment or potential investment opportunity may become available to the investment adviser. If such information becomes available, the
investment adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. The investment adviser may also
from time to time be subject to contractual ‘‘stand-still’’ obligations and/or confidentiality obligations that may restrict its ability to trade in certain investments on a Fund’s behalf. In addition, the investment
adviser may be precluded from disclosing such information to an investment team, even in circumstances in which the information would be beneficial if disclosed. Therefore, the investment team may not be provided access to material non-public
information in the possession of Morgan Stanley that might be relevant to an investment decision to be made on behalf of a Fund, and the investment team may initiate a transaction or sell an investment that, if such information had been known to it,
may not have been undertaken. In addition, certain members of the investment team may be recused from certain investment-related discussions so that such members do not receive information that would limit their ability to perform functions of their
employment with the investment adviser or its affiliates unrelated to that of a Fund. Furthermore, access to certain parts of Morgan Stanley may be subject to third party confidentiality obligations and to information barriers established by Morgan
Stanley in order to manage potential conflicts of interest and regulatory restrictions, including without limitation joint transaction restrictions pursuant to the 1940 Act. Accordingly, the investment adviser’s ability to source investments
from other business units within Morgan Stanley may be limited and there can be no assurance that the investment adviser will be able to source any investments from any one or more parts of the Morgan Stanley network.
The investment adviser may restrict its investment decisions
and activities on behalf of the Funds in various circumstances, including because of applicable regulatory requirements or information held by the investment adviser or Morgan Stanley. The investment adviser might not engage in transactions or other
activities for, or enforce certain rights in favor of, a Fund due to Morgan Stanley’s activities outside the Funds. In instances where trading of an investment is restricted, the investment adviser may not be able to purchase or sell such
investment on behalf of a Fund, resulting in the Fund’s inability to participate in certain desirable transactions. This inability to buy or sell an investment could have an adverse effect on a Fund’s portfolio due to, among other
things, changes in an investment’s value during the period its trading is restricted. Also, in situations where the investment adviser is required to aggregate its positions with those of other Morgan Stanley business units for position limit
calculations, the investment adviser may have to refrain from making investments due to the positions held by other Morgan Stanley business units or their clients. There may be other situations where the investment adviser refrains from making an
investment due to additional disclosure obligations, regulatory requirements, policies, and reputational risk, or the investment adviser may limit purchases or sales of securities in respect of which Morgan Stanley is engaged in an underwriting or
other distribution capacity.
Morgan Stanley has
established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley. As a result of information barriers, the investment adviser generally will not have access, or will
have limited access, to certain information and personnel in other areas of Morgan Stanley relating to business transactions for clients (including transactions in investing, banking, prime brokerage and certain other areas), and generally will not
manage the Funds with the benefit of the information held by such other areas. Morgan Stanley, due to its access to and knowledge of funds, markets and securities based on its prime brokerage and other businesses, may make decisions based on
information or take (or refrain from taking) actions with respect to interests in investments of the kind held (directly or indirectly) by the Funds in a manner that may be adverse to the Funds, and will not have any obligation or other duty to
share information with the investment adviser.
In limited
circumstances, however, including for purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, Morgan Stanley personnel, including personnel of the investment adviser, on one side of
an information barrier may have access to information and personnel on the other side of the information barrier through “wall crossings.” The investment adviser faces conflicts of interest in determining whether to engage in such wall
crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the investment adviser to engage in or otherwise effect transactions on behalf of the Funds (including purchasing or selling securities that
the investment adviser may otherwise have purchased or sold for a Fund in the absence of a wall crossing). In managing conflicts of interest that arise because of the foregoing, the investment adviser generally will be subject to fiduciary
requirements. The investment adviser may also implement internal information barriers or ethical walls, and the conflicts described herein with respect to information barriers and otherwise with respect to Morgan Stanley and the
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January 31, 2023
Potential Conflicts of
Interest — continued
investment adviser
will also apply internally within the investment adviser. As a result, a Fund may not be permitted to transact in (e.g., dispose of a security in whole or in part) during periods when it otherwise would have been able to do so, which could adversely
affect a Fund. Other investors in the security that are not subject to such restrictions may be able to transact in the security during such periods. There may also be circumstances in which, as a result of information held by certain portfolio
management teams in the investment adviser, the investment adviser limits an activity or transaction for a Fund, including if the Fund is managed by a portfolio management team other than the team holding such information.
Investments by Morgan Stanley and its Affiliated Investment
Accounts. In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the investment adviser and its investment teams, may have obligations to other clients or investors in
Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of a Fund or its shareholders. A Fund’s investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a
result, the members of an investment team may face conflicts in the allocation of investment opportunities among a Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the investment adviser. Certain
Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the investment adviser
to favor such other accounts.
Morgan Stanley
currently invests and plans to continue to invest on its own behalf and on behalf of its Affiliated Investment Accounts in a wide variety of investment opportunities globally. Morgan Stanley and its Affiliated Investment Accounts, to the extent
consistent with applicable law and policies and procedures, will be permitted to invest in investment opportunities without making such opportunities available to a Fund beforehand. Subject to the foregoing, Morgan Stanley may offer investments that
fall into the investment objectives of an Affiliated Investment Account to such account or make such investment on its own behalf, even though such investment also falls within a Fund’s investment objectives. A Fund may invest in opportunities
that Morgan Stanley and/or one or more Affiliated Investment Accounts has declined, and vice versa. All of the foregoing may reduce the number of investment opportunities available to a Fund and may create conflicts of interest in allocating
investment opportunities. Investors should note that the conflicts inherent in making such allocation decisions may not always be resolved to a Fund’s advantage. There can be no assurance that a Fund will have an opportunity to participate in
certain opportunities that fall within their investment objectives.
To seek to reduce potential conflicts of interest and to
attempt to allocate such investment opportunities in a fair and equitable manner, the investment adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the investment adviser,
including the Funds, fair access to investment opportunities consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the investment adviser. Each client of the
investment adviser that is subject to the allocation policies and procedures, including each Fund, is assigned an investment team and portfolio manager(s) by the investment adviser. The investment team and portfolio managers review investment
opportunities and will decide with respect to the allocation of each opportunity considering various factors and in accordance with the allocation policies and procedures. The allocation policies and procedures are subject to change. Investors
should note that the conflicts inherent in making such allocation decisions may not always be resolved to the advantage of a Fund.
It is possible that Morgan Stanley or an Affiliated Investment
Account, including another Eaton Vance fund, will invest in or advise a company that is or becomes a competitor of a company of which a Fund holds an investment. Such investment could create a conflict between the Fund, on the one hand, and Morgan
Stanley or the Affiliated Investment Account, on the other hand. In such a situation, Morgan Stanley may also have a conflict in the allocation of its own resources to the portfolio investment. Furthermore, certain Affiliated Investment Accounts
will be focused primarily on investing in other funds which may have strategies that overlap and/or directly conflict and compete with a Fund.
In addition, certain investment professionals who are involved
in a Fund’s activities remain responsible for the investment activities of other Affiliated Investment Accounts managed by the investment adviser and its affiliates, and they will devote time to the management of such investments and other
newly created Affiliated Investment Accounts (whether in the form of funds, separate accounts or other vehicles), as well as their own investments. In addition, in connection with the management of investments for other Affiliated Investment
Accounts, members of Morgan Stanley and its affiliates may serve on the boards of directors of or advise companies which may compete with a Fund’s portfolio investments. Moreover, these Affiliated Investment Accounts managed by Morgan Stanley
and its affiliates may pursue investment opportunities that may also be suitable for a Fund.
It should be noted that Morgan Stanley may, directly or
indirectly, make large investments in certain of its Affiliated Investment Accounts, and accordingly Morgan Stanley’s investment in a Fund may not be a determining factor in the outcome of any of the foregoing conflicts. Nothing herein
restricts or in any way limits the activities of Morgan Stanley, including its ability to buy or sell interests in, or provide financing to, equity and/or debt instruments, funds or portfolio companies, for its own accounts or for the accounts of
Affiliated Investment Accounts or other investment funds or clients in accordance with applicable law.
Different clients of the investment adviser, including a Fund,
may invest in different classes of securities of the same issuer, depending on the respective clients’ investment objectives and policies. As a result, the investment adviser and its affiliates, at times, will seek to satisfy fiduciary
obligations to certain clients owning one class of securities of a particular issuer by pursuing or enforcing rights on behalf of those clients with respect to such class of securities, and those activities may have an adverse effect on another
client which owns a different class of securities of such issuer. For example, if one client holds debt securities of an issuer and another client holds equity securities of the same issuer, if the issuer experiences financial or operational
challenges, the investment adviser and its affiliates may seek a liquidation of the issuer on behalf of the client that holds the debt securities, whereas the client holding the
Eaton Vance
Municipal Income 2028 Term Trust
January 31, 2023
Potential Conflicts of
Interest — continued
equity securities may
benefit from a reorganization of the issuer. Thus, in such situations, the actions taken by the investment adviser or its affiliates on behalf of one client can negatively impact securities held by another client. These conflicts also exist as
between the investment adviser’s clients, including the Funds, and the Affiliated Investment Accounts managed by Morgan Stanley.
The investment adviser and its affiliates may give advice and
recommend securities to other clients which may differ from advice given to, or securities recommended or bought for, a Fund even though such other clients’ investment objectives may be similar to those of the Fund.
The investment adviser and its affiliates manage long and short
portfolios. The simultaneous management of long and short portfolios creates conflicts of interest in portfolio management and trading in that opposite directional positions may be taken in client accounts, including client accounts managed by the
same investment team, and creates risks such as: (i) the risk that short sale activity could adversely affect the market value of long positions in one or more portfolios (and vice versa) and (ii) the risks associated with the trading desk receiving
opposing orders in the same security simultaneously. The investment adviser and its affiliates have adopted policies and procedures that are reasonably designed to mitigate these conflicts. In certain circumstances, the investment adviser invests on
behalf of itself in securities and other instruments that would be appropriate for, held by, or may fall within the investment guidelines of its clients, including a Fund. At times, the investment adviser may give advice or take action for its own
accounts that differs from, conflicts with, or is adverse to advice given or action taken for any client.
From time to time, conflicts also arise due to the fact that
certain securities or instruments may be held in some client accounts, including a Fund, but not in others, or that client accounts may have different levels of holdings in certain securities or instruments. In addition, due to differences in the
investment strategies or restrictions among client accounts, the investment adviser may take action with respect to one account that differs from the action taken with respect to another account. In some cases, a client account may compensate the
investment adviser based on the performance of the securities held by that account. The existence of such a performance based fee may create additional conflicts of interest for the investment adviser in the allocation of management time, resources
and investment opportunities. The investment adviser has adopted several policies and procedures designed to address these potential conflicts including a code of ethics and policies that govern the investment adviser’s trading practices,
including, among other things, the aggregation and allocation of trades among clients, brokerage allocations, cross trades and best execution.
In addition, at times an investment adviser investment team
will give advice or take action with respect to the investments of one or more clients that is not given or taken with respect to other clients with similar investment programs, objectives, and strategies. Accordingly, clients with similar
strategies will not always hold the same securities or instruments or achieve the same performance. The investment adviser’s investment teams also advise clients with conflicting programs, objectives or strategies. These conflicts also exist
as between the investment adviser’s clients, including the Funds, and the Affiliated Investment Accounts managed by Morgan Stanley.
The investment adviser maintains separate trading desks by
investment team and generally based on asset class, including two trading desks trading equity securities. These trading desks operate independently of one another. The two equity trading desks do not share information. The separate equity trading
desks may result in one desk competing against the other desk when implementing buy and sell transactions, possibly causing certain accounts to pay more or receive less for a security than other accounts. In addition, Morgan Stanley and its
affiliates maintain separate trading desks that operate independently of each other and do not share trading information with the investment adviser. These trading desks may compete against the investment adviser trading desks when implementing buy
and sell transactions, possibly causing certain Affiliated Investment Accounts to pay more or receive less for a security than other Affiliated Investment Accounts.
Investments by Separate Investment Departments. The entities and individuals that provide investment-related services for the Fund and certain other Eaton Vance Investment Accounts (the “Eaton Vance Investment Department”) may be different from the
entities and individuals that provide investment-related services to MS Investment Accounts (the “MS Investment Department and, together with the Eaton Vance Investment Department, the “Investment Departments”). Although Morgan
Stanley has implemented information barriers between the Investment Departments in accordance with internal policies and procedures, each Investment Department may engage in discussions and share information and resources with the other Investment
Department on certain investment-related matters. The sharing of information and resources between the Investment Departments is designed to further increase the knowledge and effectiveness of each Investment Department. Because each Investment
Department generally makes investment decisions and executes trades independently of the other, the quality and price of execution, and the performance of investments and accounts, can be expected to vary. In addition, each Investment Department may
use different trading systems and technology and may employ differing investment and trading strategies. As a result, a MS Investment Account could trade in advance of the Fund (and vice versa), might complete trades more quickly and efficiently
than the Fund, and/or achieve different execution than the Fund on the same or similar investments made contemporaneously, even when the Investment Departments shared research and viewpoints that led to that investment decision. Any sharing of
information or resources between the Investment Department servicing the Fund and the MS Investment Department may result, from time to time, in the Fund simultaneously or contemporaneously seeking to engage in the same or similar transactions as an
account serviced by the other Investment Department and for which there are limited buyers or sellers on specific securities, which could result in less favorable execution for the Fund than such account. The Eaton Vance Investment Department will
not knowingly or intentionally cause the Fund to engage in a cross trade with an account serviced by the MS Investment Department, however, subject to applicable law and internal policies and procedures, the Fund may conduct cross trades with other
accounts serviced by the Eaton Vance Investment Department. Although the Eaton Vance Investment Department may aggregate the Fund’s trades with trades of other accounts serviced by the Eaton Vance Investment Department, subject to applicable
law and internal policies and procedures, there will be no aggregation or coordination of trades with accounts serviced by the MS Investment Department, even when both Investment Departments are seeking to acquire or dispose of the same investments
contemporaneously.
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Municipal Income 2028 Term Trust
January 31, 2023
Potential Conflicts of
Interest — continued
Payments
to Broker-Dealers and Other Financial Intermediaries. The investment adviser and/or EVD may pay compensation, out of their own funds and not as an expense of the Funds, to certain financial intermediaries (which may
include affiliates of the investment adviser and EVD), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Funds and/or shareholder
servicing. For example, the investment adviser or EVD may pay additional compensation to a financial intermediary for, among other things, promoting the sale and distribution of Fund shares, providing access to various programs, mutual fund
platforms or preferred or recommended mutual fund lists that may be offered by a financial intermediary, granting EVD access to a financial intermediary’s financial advisors and consultants, providing assistance in the ongoing education and
training of a financial intermediary’s financial personnel, furnishing marketing support, maintaining share balances and/or for sub-accounting, recordkeeping, administrative, shareholder or transaction processing services. Such payments are in
addition to any distribution fees, shareholder servicing fees and/or transfer agency fees that may be payable by the Funds. The additional payments may be based on various factors, including level of sales (based on gross or net sales or some
specified minimum sales or some other similar criteria related to sales of the Funds and/or some or all other Eaton Vance funds), amount of assets invested by the financial intermediary’s customers (which could include current or aged assets
of the Funds and/or some or all other Eaton Vance funds), a Fund’s advisory fee, some other agreed upon amount or other measures as determined from time to time by the investment adviser and/or EVD. The amount of these payments may be
different for different financial intermediaries.
The prospect of receiving, or the receipt of, additional
compensation, as described above, by financial intermediaries may provide such financial intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Funds over other investment options with
respect to which these financial intermediaries do not receive additional compensation (or receive lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Funds
or the amount that the Funds receive to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any
disclosures provided by financial intermediaries as to their compensation. In addition, in certain circumstances, the investment adviser may restrict, limit or reduce the amount of a Fund’s investment, or restrict the type of governance or
voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.
Morgan Stanley Trading and Principal Investing Activities. Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for a Fund’s
holdings, although these activities could have an adverse impact on the value of one or more of the Fund’s investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and
potentially adverse to that of a Fund. Furthermore, from time to time, the investment adviser or its affiliates may invest “seed” capital in a Fund, typically to enable the Fund to commence investment operations and/or achieve sufficient
scale. The investment adviser and its affiliates may hedge such seed capital exposure by investing in derivatives or other instruments expected to produce offsetting exposure. Such hedging transactions, if any, would occur outside of a
Fund.
Morgan Stanley’s sales and trading,
financing and principal investing businesses (whether or not specifically identified as such, and including Morgan Stanley’s trading and principal investing businesses) will not be required to offer any investment opportunities to a Fund.
These businesses may encompass, among other things, principal trading activities as well as principal investing.
Morgan Stanley’s sales and trading, financing and
principal investing businesses have acquired or invested in, and in the future may acquire or invest in, minority and/or majority control positions in equity or debt instruments of diverse public and/or private companies. Such activities may put
Morgan Stanley in a position to exercise contractual, voting or creditor rights, or management or other control with respect to securities or loans of portfolio investments or other issuers, and in these instances Morgan Stanley may, in its
discretion and subject to applicable law, act to protect its own interests or interests of clients, and not a Fund’s interests.
Subject to the limitations of applicable law, a Fund may
purchase from or sell assets to, or make investments in, companies in which Morgan Stanley has or may acquire an interest, including as an owner, creditor or counterparty.
Morgan Stanley’s Investment Banking and Other Commercial
Activities. Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment
funds that may compete with a Fund and with respect to investments that a Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve
an action of a different timing or nature than the action taken, by a Fund. Morgan Stanley may give advice and provide recommendations to persons competing with a Fund and/or any of a Fund’s investments that are contrary to the Fund’s
best interests and/or the best interests of any of its investments.
Morgan Stanley could be engaged in financial advising, whether
on the buy-side or sell-side, or in financing or lending assignments that could result in Morgan Stanley’s determining in its discretion or being required to act exclusively on behalf of one or more third parties, which could limit a
Fund’s ability to transact with respect to one or more existing or potential investments. Morgan Stanley may have relationships with third-party funds, companies or investors who may have invested in or may look to invest in portfolio
companies, and there could be conflicts between a Fund’s best interests, on the one hand, and the interests of a Morgan Stanley client or counterparty, on the other hand.
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January 31, 2023
Potential Conflicts of
Interest — continued
To the
extent that Morgan Stanley advises creditor or debtor companies in the financial restructuring of companies either prior to or after filing for protection under Chapter 11 of the U.S. Bankruptcy Code or similar laws in other jurisdictions, the
investment adviser’s flexibility in making investments in such restructurings on a Fund’s behalf may be limited.
Morgan Stanley could provide investment banking services to
competitors of portfolio companies, as well as to private equity and/or private credit funds; such activities may present Morgan Stanley with a conflict of interest vis-a-vis a Fund’s investment and may also result in a conflict in respect of
the allocation of investment banking resources to portfolio companies.
To the extent permitted by applicable law, Morgan Stanley may
provide a broad range of financial services to companies in which a Fund invests, including strategic and financial advisory services, interim acquisition financing and other lending and underwriting or placement of securities, and Morgan Stanley
generally will be paid fees (that may include warrants or other securities) for such services. Morgan Stanley will not share any of the foregoing interest, fees and other compensation received by it (including, for the avoidance of doubt, amounts
received by the investment adviser) with a Fund, and any advisory fees payable will not be reduced thereby.
Morgan Stanley may be engaged to act as a financial advisor to
a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in
connection with such transactions. Morgan Stanley’s compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, a
Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to merger or acquisition.
The involvement or presence of Morgan Stanley in the investment
banking and other commercial activities described above (or the financial markets more broadly) may restrict or otherwise limit investment opportunities that may otherwise be available to the Funds. For example, issuers may hire and compensate
Morgan Stanley to provide underwriting, financial advisory, placement agency, brokerage services or other services and, because of limitations imposed by applicable law and regulation, a Fund may be prohibited from buying or selling securities
issued by those issuers or participating in related transactions or otherwise limited in its ability to engage in such investments.
Morgan Stanley’s Marketing Activities. Morgan Stanley is engaged in the business of underwriting, syndicating, brokering, administering, servicing, arranging and advising on the distribution of a wide variety of securities and other investments in which a
Fund may invest. Subject to the restrictions of the 1940 Act, including Sections 10(f) and 17(e) thereof, a Fund may invest in transactions in which Morgan Stanley acts as underwriter, placement agent, syndicator, broker, administrative agent,
servicer, advisor, arranger or structuring agent and receives fees or other compensation from the sponsors of such products or securities. Any fees earned by Morgan Stanley in such capacity will not be shared with the investment adviser or the
Funds. Certain conflicts of interest, in addition to the receipt of fees or other compensation, would be inherent in these transactions. Moreover, the interests of one of Morgan Stanley’s clients with respect to an issuer of securities in
which a Fund has an investment may be adverse to the investment adviser’s or a Fund’s best interests. In conducting the foregoing activities, Morgan Stanley will be acting for its other clients and will have no obligation to act in the
investment adviser’s or a Fund’s best interests.
Client Relationships. Morgan
Stanley has existing and potential relationships with a significant number of corporations, institutions and individuals. In providing services to its clients, Morgan Stanley may face conflicts of interest with respect to activities recommended to
or performed for such clients, on the one hand, and a Fund, its shareholders or the entities in which the Fund invests, on the other hand. In addition, these client relationships may present conflicts of interest in determining whether to offer
certain investment opportunities to a Fund.
In
acting as principal or in providing advisory and other services to its other clients, Morgan Stanley may engage in or recommend activities with respect to a particular matter that conflict with or are different from activities engaged in or
recommended by the investment adviser on a Fund’s behalf.
Principal Investments. To the
extent permitted by applicable law, there may be situations in which a Fund’s interests may conflict with the interests of one or more general accounts of Morgan Stanley and its affiliates or accounts managed by Morgan Stanley or its
affiliates. This may occur because these accounts hold public and private debt and equity securities of many issuers which may be or become portfolio companies, or from whom portfolio companies may be acquired.
Transactions with Portfolio Companies of Affiliated Investment
Accounts. The companies in which a Fund may invest may be counterparties to or participants in agreements, transactions or other arrangements with portfolio companies or other entities of portfolio investments of
Affiliated Investment Accounts (for example, a company in which a Fund invests may retain a company in which an Affiliated Investment Account invests to provide services or may acquire an asset from such company or vice versa). Certain of these
agreements, transactions and arrangements involve fees, servicing payments, rebates and/or other benefits to Morgan Stanley or its affiliates. For example, portfolio entities may, including at the encouragement of Morgan Stanley, enter into
agreements regarding group procurement and/or vendor discounts. Morgan Stanley and its affiliates may also participate in these agreements and may realize better pricing or discounts as a result of the participation of portfolio entities. To the
extent permitted by applicable law, certain of these agreements may provide for commissions or similar payments and/or discounts or rebates to be paid to a portfolio entity of an Affiliated Investment Account, and such payments or discounts or
rebates may also be made directly to Morgan Stanley or its affiliates. Under these arrangements, a particular portfolio company or other entity may benefit to a greater degree than the other participants, and the funds, investment vehicles and
accounts (which may
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Potential Conflicts of
Interest — continued
or may not include a
Fund) that own an interest in such entity will receive a greater relative benefit from the arrangements than the Eaton Vance funds, investment vehicles or accounts that do not own an interest therein. Fees and compensation received by portfolio
companies of Affiliated Investment Accounts in relation to the foregoing will not be shared with a Fund or offset advisory fees payable.
Investments in Portfolio Investments of Other Funds. To the extent permitted by applicable law, when a Fund invests in certain companies or other entities, other funds affiliated with the investment adviser may have made or may be making an investment in such companies or
other entities. Other funds that have been or may be managed by the investment adviser may invest in the companies or other entities in which a Fund has made an investment. Under such circumstances, a Fund and such other funds may have conflicts of
interest (e.g., over the terms, exit strategies and related matters, including the exercise of remedies of their respective investments). If the interests held by a Fund are different from (or take priority over) those held by such other funds, the
investment adviser may be required to make a selection at the time of conflicts between the interests held by such other funds and the interests held by a Fund.
Allocation of Expenses.
Expenses may be incurred that are attributable to a Fund and one or more other Affiliated Investment Accounts (including in connection with issuers in which a Fund and such other Affiliated Investment Accounts have overlapping investments). The
allocation of such expenses among such entities raises potential conflicts of interest. The investment adviser and its affiliates intend to allocate such common expenses among a Fund and any such other Affiliated Investment Accounts on a pro rata
basis or in such other manner as the investment adviser deems to be fair and equitable or in such other manner as may be required by applicable law.
Temporary Investments. To more
efficiently invest short-term cash balances held by a Fund, the investment adviser may invest such balances on an overnight “sweep” basis in shares of one or more money market funds or other short-term vehicles. It is anticipated that
the investment adviser to these money market funds or other short-term vehicles may be the investment adviser (or an affiliate) to the extent permitted by applicable law, including Rule 12d1-1 under the 1940 Act.
Transactions with Affiliates.
The investment adviser and any investment sub-adviser might purchase securities from underwriters or placement agents in which a Morgan Stanley affiliate is a member of a syndicate or selling group, as a result of
which an affiliate might benefit from the purchase through receipt of a fee or otherwise. Neither the investment adviser nor any investment sub-adviser will purchase securities on behalf of a Fund from an affiliate that is acting as a manager of a
syndicate or selling group. Purchases by the investment adviser on behalf of a Fund from an affiliate acting as a placement agent must meet the requirements of applicable law. Furthermore, Morgan Stanley may face conflicts of interest when the Funds
use service providers affiliated with Morgan Stanley because Morgan Stanley receives greater overall fees when they are used.
General Process for Potential Conflicts. All of the transactions described above involve the potential for conflicts of interest between the investment adviser, related persons of the investment adviser and/or their clients. The Advisers Act, the 1940 Act and
ERISA impose certain requirements designed to decrease the possibility of conflicts of interest between an investment adviser and its clients. In some cases, transactions may be permitted subject to fulfillment of certain conditions. Certain other
transactions may be prohibited. In addition, the investment adviser has instituted policies and procedures designed to prevent conflicts of interest from arising and, when they do arise, to ensure that it effects transactions for clients in a manner
that is consistent with its fiduciary duty to its clients and in accordance with applicable law. The investment adviser seeks to ensure that potential or actual conflicts of interest are appropriately resolved taking into consideration the
overriding best interests of the client.
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. American Stock Transfer & Trust Company, LLC (“AST”), the closed-end funds transfer agent, or your financial intermediary, may household the mailing of your documents
indefinitely unless you instruct AST, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact AST or 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 AST 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.
Share Repurchase
Program. The Fund’s Board of Trustees has approved a share repurchase program authorizing the Fund to repurchase up to 10% of its common shares
outstanding as of the last day of the prior calendar year in open-market transactions at a discount to net asset value. The repurchase program does not obligate the Fund to purchase a specific amount of shares. The Fund’s repurchase activity,
including the number of shares purchased, average price and average discount to net asset value, is disclosed in the Fund’s annual and semi-annual reports to shareholders.
Additional Notice to Shareholders. If applicable, a Fund may also redeem or purchase its outstanding preferred shares in order to maintain compliance with regulatory requirements, borrowing or
rating agency requirements or for other purposes as it deems appropriate or necessary.
Closed-End Fund Information. Eaton Vance closed-end funds make fund performance data and certain information about portfolio characteristics available on the Eaton Vance website shortly
after the end of each month. Other information about the funds is available on the website. The funds’ net asset value per share is readily accessible on the Eaton Vance website. Portfolio holdings for the most recent month-end are also posted
to the website approximately 30 days following the end of the month. This information is available at www.eatonvance.com on the fund information pages under “Closed-End Funds & Term Trusts.”
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Investment Adviser and Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
Fund Offices
Two International Place
Boston, MA 02110