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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended October 31, 2020

or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to ____________

Commission File Number 1-8100

EATON VANCE CORP.

(Exact name of registrant as specified in its charter)

Maryland

 

04-2718215

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

 

 

 

Two International Place, Boston, Massachusetts 02110

 

 

(Address of principal executive offices) (zip code)

 

 

 

 

 

(617) 482-8260

 

 

(Registrant's telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Non-Voting Common Stock, $0.00390625 par value

EV

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer


Accelerated filer


Non-accelerated filer


Smaller reporting company


Emerging growth company


 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Aggregate market value of Non-Voting Common Stock held by non-affiliates of the Registrant, based on the closing price of $36.70 on April 30, 2020 on the New York Stock Exchange was $4,030,767,061. Calculation of holdings by non-affiliates is based upon the assumption, for these purposes only, that executive officers, directors, and persons holding 5 percent or more of the registrant’s Non-Voting Common Stock are affiliates.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the close of the latest practicable date.

Class:

 

Outstanding at October 31, 2020

Non-Voting Common Stock, $0.00390625 par value

 

114,196,609

Voting Common Stock, $0.00390625 par value

 

464,716

 

 


 

Eaton Vance Corp.

Form 10-K

For the Fiscal Year Ended October 31, 2020

Index

 

Required Information

 

Page Number Reference

 

 

 

Part I

 

 

Item 1.

Business

3

Item 1A.

Risk Factors

20

Item 1B.

Unresolved Staff Comments

33

Item 2.

Properties

33

Item 3.

Legal Proceedings

33

Item 4.

Mine Safety Disclosures

33

 

 

 

Part II

 

 

Item 5.

Market for Registrant’s Common Equity, Related

Stockholder Matters and Issuer Purchases of Equity

Securities

 

 

34

Item 6.

Selected Financial Data

37

Item 7.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

 

38

Item 7A.

Quantitative and Qualitative Disclosures About

Market Risk

 

76

Item 8.

Financial Statements and Supplementary Data

79

Item 9.

Changes in and Disagreements with Accountants on

Accounting and Financial Disclosure

 

151

Item 9A.

Controls and Procedures

151

Item 9B.

Other Information

154

 

 

 

Part III

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

155

Item 11.

Executive Compensation

163

Item 12.

Security Ownership of Certain Beneficial Owners and

Management and Related Stockholder Matters

 

189

Item 13.

Certain Relationships and Related Transactions, and Director

Independence

 

194

Item 14.

Principal Accountant Fees and Services

195

 

 

 

Part IV

 

 

Item 15.

Exhibits and Financial Statement Schedules

196

Item 16.

Form 10-K Summary

200

Signatures

 

201

 

 

 

2


 

PART I

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K for Eaton Vance Corp. (Eaton Vance or the Company) includes statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including statements regarding our expectations, intentions or strategies regarding the future. All statements, other than statements of historical facts, included in this Annual Report on Form 10-K regarding our financial position, business strategy and other plans and objectives for future operations are forward-looking statements. The terms “may,” “will,” “could,” “anticipate,” “plan,” “continue,” “project,” “intend,” “estimate,” “believe,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. Although we believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that they will prove to be correct or that we will take any actions that may now be planned. Certain important factors that could cause actual results to differ materially from our expectations, including factors related to the proposed acquisition of Eaton Vance by Morgan Stanley, are disclosed in Risk Factors under Item 1A of this Annual Report on Form 10-K. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 1. Business

 

General

 

Eaton Vance Corp. provides advanced investment strategies and wealth management solutions to forward-thinking investors around the world. Our principal business is managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. Our core strategy is to develop and sustain management expertise across a range of investment disciplines and to offer leading investment strategies and services through multiple distribution channels. In executing our core strategy, we have developed broadly diversified investment management capabilities and a highly functional marketing, distribution and customer service organization. We measure our success as a Company based principally on investment performance delivered, client satisfaction, reputation in the marketplace, progress achieving strategic objectives, employee development and satisfaction, business and financial results, and shareholder value created.

 

We conduct our investment management and advisory business through wholly- and majority-owned investment affiliates, which include: Eaton Vance Management (EVM), Parametric Portfolio Associates LLC (Parametric), Atlanta Capital Management Company, LLC (Atlanta Capital) and Calvert Research and Management (Calvert). We also offer investment management advisory services through minority-owned affiliate Hexavest Inc. (Hexavest).

 

Through EVM, Atlanta Capital, Calvert and our other affiliates, we manage active equity, income, alternative and blended strategies across a range of investment styles and asset classes, including U.S., global and international equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds, and mortgage-backed securities. Through Parametric, we manage a range of systematic investment strategies, including systematic equity, systematic fixed income, systematic alternatives and

3


 

managed options strategies. Through Parametric, we also provide portfolio overlay services and manage custom separate account portfolios, including Custom Core™ equity, Custom Core fixed income, laddered fixed income, multi-asset and multi-manager portfolios. We also oversee the management of, and distribute, investment funds sub-advised by unaffiliated third-party managers, including global, emerging market and regional equity and asset allocation strategies.

 

Our breadth of investment management capabilities supports a wide range of strategies and services offered to fund shareholders and separate account investors. Our equity strategies encompass a diversity of investment objectives, risk profiles, income levels and geographic representation. Our income investment strategies cover a broad duration, geographic representation and credit quality range and encompass both taxable and tax-free investments. We also offer alternative investment strategies that include global macro absolute return and commodity-based investments. Although we manage and distribute a wide range of investment strategies and services, we operate in one business segment, namely as an investment adviser to funds and separate accounts. As of October 31, 2020, we had $515.7 billion in consolidated assets under management.

 

We distribute our funds and individual separately managed accounts principally through financial intermediaries. We have broad market reach, with distribution partners including national and regional broker-dealers, independent broker-dealers, registered investment advisors, banks and insurance companies. We support these distribution partners with a team of approximately 160 sales professionals covering U.S. and international markets.

 

We employ approximately 30 sales professionals focused on serving institutional and high-net-worth clients who access investment management services on a direct basis and through investment consultants. Through our wholly- and majority-owned affiliates, we manage investments for a broad range of clients in the institutional and high-net-worth marketplace in the U.S. and internationally, including corporations, sovereign wealth funds, endowments, foundations, family offices and public and private employee retirement plans.

 

Proposed Acquisition of Eaton Vance by Morgan Stanley

 

On October 8, 2020, Eaton Vance and Morgan Stanley announced that they had entered into a definitive agreement for Morgan Stanley to acquire Eaton Vance. Under the terms of the merger agreement, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 shares of Morgan Stanley Common Stock per share of Eaton Vance Common Stock held. The merger agreement contains an election procedure whereby each Eaton Vance shareholder may elect to receive the merger consideration all in cash or all in stock, subject to proration and adjustment.

 

The merger agreement also provided for Eaton Vance shareholders to receive a special cash dividend of $4.25 per share of Eaton Vance Common Stock held. On November 23, 2020, the Eaton Vance Board of Directors declared the $4.25 per share dividend, which was paid on December 18, 2020 to shareholders of record on December 4, 2020.

 

The proposed transaction is subject to customary closing conditions and is expected to close in the second quarter of 2021.

 

4


 

Company History

 

We have been in the investment management business for over 90 years, tracing our history to two Boston-based investment managers: Eaton & Howard, formed in 1924, and Vance, Sanders & Company, organized in 1934. Eaton & Howard, Vance Sanders, Inc. (renamed Eaton Vance Management, Inc. in June 1984 and reorganized as Eaton Vance Management in October 1990) was formed upon the acquisition of Eaton & Howard, Incorporated by Vance, Sanders & Company, Inc. on April 30, 1979. Following the 1979 merger of these predecessor organizations to form Eaton Vance, our managed assets consisted primarily of mutual funds marketed to U.S. retail investors under the Eaton Vance brand and investment counsel services offered directly to high-net-worth and institutional investors. Over the ensuing years, we have expanded our investment offerings and distribution efforts to include closed-end, private and offshore funds, separately managed accounts offered through financial intermediaries, a broad array of investment strategies and services for institutional and high-net-worth investors, and multiple responsible investing options.

 

Our long-term growth strategy focuses on developing and growing market-leading investment franchises and expanding our distribution reach into new channels and geographic markets. Recent strategic acquisitions include the purchase of the business assets of WaterOak Advisors, LLC (WaterOak) in October 2020 and our purchase of substantially all of the business assets of Calvert Investment Management, Inc. (Calvert Investments) in fiscal 2017.

 

In October 2020, we completed the purchase of the business assets of WaterOak, a wealth management firm headquartered in Winter Park, Florida, with $2.3 billion of client assets under management. WaterOak has been combined with Eaton Vance Investment Counsel to form Eaton Vance WaterOak Advisors (Eaton Vance WaterOak). Eaton Vance WaterOak provides high-net-worth families and institutions with access to sophisticated wealth management and investment solutions – including financial, estate and tax planning, investment management, and family office and trust services. Operating from Boston, New York and Florida, Eaton Vance WaterOak had $9.8 billion of client assets under management as of October 31, 2020.

 

In December 2016, we completed the purchase of substantially all of the business assets of Calvert Investments. Founded in 1976, Calvert Investments became a pioneer in responsible investing in 1982 by launching the first mutual fund to avoid investing in companies doing business in apartheid-era South Africa. At acquisition, Calvert had $11.9 billion of assets under management. Of this, $2.1 billion had previously been included in the Company’s consolidated managed assets because Atlanta Capital is sub-adviser to one of the Calvert-sponsored mutual funds (Calvert Funds). The total managed assets of Calvert, including assets sub-advised by other Eaton Vance affiliates, have grown to $26.2 billion at October 31, 2020, reflecting cumulative net inflows of $9.6 billion and market price appreciation of $4.6 billion since acquisition.

 

Investment Managers and Distributors

 

We conduct our consolidated investment management business through EVM, Parametric, Atlanta Capital, Calvert and other direct and indirect subsidiaries, including Boston Management and Research (BMR), Eaton Vance Advisers International Ltd. (EVAIL), Eaton Vance Global Advisors Limited (EVGA), Eaton Vance WaterOak, Eaton Vance Management (International) Limited (EVMI) and Eaton Vance Trust Company (EVTC). EVM, Parametric, Atlanta Capital, Calvert, BMR, EVAIL and Eaton Vance WaterOak are all registered with the U.S. Securities and Exchange Commission (SEC) as investment advisers under the Investment Advisers Act of 1940 (Advisers Act). EVTC, a Maine-chartered trust company, is exempt from registration under the Advisers Act. EVAIL is a wholly-owned Full Scope Alternative Investment Fund Manager licensed by the Financial Conduct Authority (FCA) of the United Kingdom (U.K.). EVGA is registered with the Central Bank of Ireland as an

5


 

Undertakings for Collective Investment in Transferable Securities (UCITS) Management Company with Individual Portfolio Management permissions. EVGA provides management services to the Eaton Vance International (Ireland) Funds Plc (EV UCITS Funds). EVMI is a wholly-owned financial services company registered with the FCA under the Financial Services and Market Act of the U.K.

 

Eaton Vance Distributors, Inc. (EVD), a wholly-owned broker-dealer registered under the Exchange Act, markets and sells Calvert, Eaton Vance and Parametric-branded funds and separately managed accounts offered through financial intermediaries. EVMI markets the EV UCITS Funds and other sponsored strategies and services in Europe and certain other international markets. Eaton Vance Management International (Asia) Pte. Ltd. (EVMIA), a wholly-owned financial services company registered with the Monetary Authority of Singapore (MAS) and holding a Capital Markets Services License for Fund Management, Dealing in Securities, Trading in Futures Contracts and Leveraged Foreign Exchange Trading, markets our affiliates’ strategies and services in the Asia-Pacific region. EVMIA operates under the Singapore Companies Act as overseen by the Accounting and Corporate Regulatory Authority in Singapore. Eaton Vance Asia Pacific, Ltd. (Eaton Vance Asia Pacific), a wholly-owned subsidiary of the Company incorporated in Cayman with a branch in Japan, is registered with the Financial Services Authority of Japan as a financial instruments business operator conducting an Investment Advisory and Agency Business as defined in Article 28(3) of the Financial Instruments and Exchange Act. Eaton Vance Asia Pacific acts as an intermediary to promote the asset management capabilities of our affiliates to registered financial instruments business operators. Eaton Vance Australia Pty. Ltd., a wholly-owned company registered as an Australian propriety company with the Australian Securities and Investment Commission, markets the strategies and services of our affiliates in Australia.

 

We are headquartered in Boston, Massachusetts. Our affiliates also maintain offices in Atlanta, Georgia; Minneapolis, Minnesota; New York, New York; Seattle, Washington; Washington, District of Columbia; Westport, Connecticut; West Palm Beach, Florida; Winter Park, Florida; London, England; Dublin, Ireland; Singapore; Sydney, Australia; and Tokyo, Japan. Our sales representatives operate throughout the United States and in the U.K., continental Europe, Asia, Australia, Canada and Latin America. We are represented in the Middle East through an agreement with a third-party distributor.

 

Current Developments

 

We are currently pursuing five primary strategic priorities: (1) capitalizing on our leadership position in specialty strategies and services for high-net-worth investors; (2) defending our floating-rate bank loan franchise and growing our short-duration fixed income franchises; (3) expanding our leadership position in responsible investing; (4) increasing our global investment capabilities and non-U.S. distribution; and (5) positioning the Company for success in a changing industry environment.

 

We report equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature as Parametric custom portfolios. This investment mandate reporting category includes Parametric Custom Core equity and fixed income strategies, Parametric laddered municipal and corporate bond separate account strategies, Parametric centralized portfolio management and Parametric multi-asset solution mandates. Parametric’s market-leading custom portfolio offerings combine the benefits of benchmark-based investing with the ability to customize portfolios to meet individual preferences and needs. In fiscal 2020, net inflows into Parametric custom portfolios totaled $5.7 billion, generating internal growth in managed assets of 3 percent. We continue to expand Parametric’s solution set and invest in technology to enhance client service and realize operating efficiencies and scale economies, further strengthening Parametric’s leadership position in the growing market for customized individual separate accounts.

 

6


 

Demand for floating-rate loan strategies contracted in fiscal 2020 as U.S. retail investors responded negatively to the sharp drop in benchmark short-term interest rates and rising credit concerns amid the COVID-19 pandemic. Our floating-rate income category moved from net outflows of $8.3 billion in fiscal 2019 to net outflows of $5.0 billion in fiscal 2020. During the fiscal year, our market share among floating-rate loan mutual funds increased as the pace of industry net outflows exceeded our own. Net inflows into Eaton Vance and Calvert short-duration and limited-term fixed income mutual funds totaled $3.8 billion in fiscal 2020, led by Eaton Vance Short-Duration Government Income Fund. Driven by strong sales, Eaton Vance Short-Duration Government Income Fund has grown to net assets of $8.6 billion at October 31, 2020.

 

The Calvert Funds are one of the largest and most diversified families of responsibly invested mutual funds, encompassing actively and passively managed equity, fixed and floating-rate income, and multi-asset strategies managed in accordance with the Calvert Principles for Responsible Investment or other responsible investment criteria. Since Calvert became part of Eaton Vance in December 2016, we have experienced significant growth in Calvert-branded investment strategies and further distinguished Calvert as a leader in environmental, social and governance (ESG) research and responsible engagement. Including the Atlanta Capital-subadvised Calvert Equity Fund, assets under management in Calvert strategies grew to $26.2 billion at October 31, 2020 from $19.8 billion at October 31, 2019, reflecting net inflows of $4.5 billion and market price appreciation of $1.9 billion. Calvert’s $4.5 billion of net inflows in fiscal 2020 equates to internal growth in managed assets of 23 percent.

 

While Calvert is the centerpiece of our responsible investment strategy, our commitment to responsible investing also encompasses our other investment affiliates. EVM and Atlanta Capital utilize Calvert’s proprietary ESG research as a component of their fundamental research processes, and portfolio customization to reflect individual client’s responsible investment criteria is a central feature of Parametric separate account offerings. As of October 31, 2020, Parametric managed $25.5 billion of client assets based on client-specified responsible investment criteria. On an overall basis, Eaton Vance is one of the largest participants in responsible investing, a position we are committed to growing in conjunction with rising demand for investment strategies that incorporate ESG-integrated investment research and/or seek to achieve both favorable investment returns and positive societal impact.

 

Our non-U.S. business had net inflows of $1.3 billion in fiscal 2020, led by EVM’s emerging market local income, global high yield and multi-asset credit strategies. Gaining greater distribution access to non-U.S. markets was a key strategic rationale for the proposed acquisition of Eaton Vance by Morgan Stanley announced on October 8, 2020.

 

The proposed acquisition of Eaton Vance by Morgan Stanley culminates a multi-year effort by our board and senior leadership to better position the Company for long-term success amid a changing environment for the asset management industry. The combination of Eaton Vance and Morgan Stanley Investment Management brings together two growing, thriving asset management organizations with complementary strengths in investment management and distribution. As a key component of one of the world’s largest asset and wealth management organizations, we will gain access to Morgan Stanley’s resources to continue investing in our investment teams, distribution and client service capabilities, technology and operating platforms, and leading brands. Morgan Stanley’s distribution reach will provide greatly expanded market opportunities for us both in the U.S. and internationally. Morgan Stanley’s broad capabilities in private equity, private credit and private real estate investments and high-growth public equities will also create opportunities for our U.S. intermediary market sales teams to position these high-value strategies alongside our custom portfolios and other wealth management solutions to extend our leading position serving high-end financial advisors and their clients.

 

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Investment Management Capabilities

 

We provide investment management and advisory services to individual and institutional investors through funds and separately managed accounts across a broad range of investment mandates. The following table sets forth our consolidated assets under management by investment mandate:

 

 

Consolidated Assets under Management by Investment Mandate(1)

 

 

 

October 31,

(in millions)

 

2020

% of Total

 

 

2019

% of Total

 

 

2018

% of Total

Equity(2)

$

135,174

26%

 

$

131,895

27%

 

$

115,772

26%

Fixed income(3)

 

73,271

14%

 

 

62,378

13%

 

 

54,339

12%

Floating-rate income

 

28,960

6%

 

 

35,103

7%

 

 

44,837

10%

Alternative(4)

 

7,424

1%

 

 

8,372

2%

 

 

12,139

3%

Parametric custom portfolios(5)

 

176,435

34%

 

 

164,895

32%

 

 

134,345

31%

Parametric overlay services

 

94,473

19%

 

 

94,789

19%

 

 

77,871

18%

Total

$

515,737

100%

 

$

497,432

100%

 

$

439,303

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Consolidated Eaton Vance Corp. See table on page 49 for directly managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above.

(2)

Includes balanced and other multi-asset mandates. Excludes equity mandates reported as Parametric custom portfolios.

(3)

Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.

(4)

Consists of absolute return and commodity mandates.

(5)

Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.

 

 

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Eaton Vance Investment Affiliates

 

Through our investment affiliates, we offer a diversity of investment approaches, encompassing bottom-up and top-down fundamental active management, responsible investing, systematic investing and customized implementation of client-specified portfolio exposures.

 

Picture 1

Fundamental active managers

History dating to 1924 | AUM: $154.4 billion(1)

 

Equity

 

Alternative

 

Taxable Fixed Income

 

Tax-Exempt Fixed Income

Dividend/Global Dividend

 

Global Macro

 

Cash Management

 

Floating-Rate Municipal

Emerging/Frontier Markets

 

Hedged Equity

 

Core Bond/Core Plus

 

High Yield Municipal

Equity Harvest

 

 

 

Emerging-Markets Debt

 

National Municipal

Equity Option

 

Multi-Asset

 

Global Bond

 

Opportunistic Municipal

Global Developed

 

Asset Allocation

 

High-Yield Corporate

 

State-Specific Municipal

Global ex U.S.

 

Balanced

 

Inflation-Linked

 

 

Global ex U.S. Small-Cap

 

Global Diversified Income

 

Investment-Grade Corporate

 

 

Global Small-Cap

 

 

 

Mortgage-Backed Securities

 

 

Health Care

 

Floating-Rate Income

 

Multi-Asset Credit

 

 

Large-Cap Core

 

Collateralized Loan

 

Preferred Securities

 

 

Large-Cap Growth

 

Obligations

 

Short Duration

 

 

Large-Cap Value

 

Floating-Rate Loan

 

Taxable Municipal

 

 

Multi-Cap Growth

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

Small-Cap

 

 

 

 

 

 

Small/Mid-Cap

 

 

 

 

 

 

Tax-Managed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Picture 4

Investment science in action

Founded in 1987 | AUM: $310.2 billion

 

Equity

 

Options-Based

 

Alternative

 

Custom Portfolios

Dividend

 

Absolute Return

 

Commodity

 

Centralized Portfolio

Emerging Markets

 

Covered Call Writing

 

 

 

Management

Global

 

Defensive Equity

 

Income

 

Custom Core® Equity

Global ex U.S.

 

Dynamic Hedged Equity

 

Enhanced Income

 

Custom Core® Fixed Income

Responsible

 

Put Selling

 

Managed Municipal

 

Laddered Corporate Bonds

Tax-Managed

 

 

 

Tax-Advantaged Bond

 

Laddered Municipal Bonds

U.S.

 

Overlay Services

 

 

 

Multi-Asset Solutions

 

 

Policy Overlay Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

________________________________________________________

(1)Includes managed assets of Eaton Vance WaterOak Advisors, Eaton Vance Trust Company and Boston Management and Research. Also includes managed assets of Eaton Vance-sponsored funds and separate accounts managed by Hexavest and unaffiliated third-party advisers under Eaton Vance supervision.

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Picture 3

Specialists in high-quality investing

Founded in 1969 | AUM: $25.0 billion

 

Equity

 

Taxable Fixed Income

 

 

 

 

Large-Cap Growth

 

Core Bond

 

 

 

 

Mid/Large-Cap Core

 

Intermediate Duration

 

 

 

 

Small-Cap Core

 

Short Duration

 

 

 

 

SMID-Cap Core

 

Short Duration Securitized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Picture 8

A global leader in Responsible Investing

History dating to 1976 | AUM: $26.2 billion(2)

 

Active Equity

 

Equity Index

 

Multi-Asset

 

Taxable Fixed Income

Emerging Markets

 

Global Energy

 

Asset Allocation

 

Core/Core Plus

Global ex U.S.

 

Global ex U.S.

 

Balanced

 

Flexible Income

Global ex U.S. Small/Mid-Cap

 

Global Water

 

 

 

Green Bond

Large-Cap

 

U.S. Large-Cap Core

 

Floating-Rate Income

 

High Yield

Mid-Cap

 

U.S. Large-Cap Growth

 

Floating-Rate Loan

 

Short Duration/Ultra-Short

Small-Cap

 

U.S. Large-Cap Value

 

 

 

 

 

 

U.S. Mid-Cap Core

 

Tax-Exempt Income

 

 

 

 

 

 

Municipal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Picture 3

Top-down global equity managers

Founded in 2004 | AUM: $5.8 billion(3)

 

Equity

 

 

 

 

 

 

Emerging Markets

 

 

 

 

 

 

Global-All Country

 

 

 

 

 

 

Global-Developed

 

 

 

 

 

 

Global ex U.S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following third-party organizations provided investment management services as sub-advisers to certain Eaton Vance- and Calvert-sponsored mutual funds and portfolios as of October 31, 2020:

 

Eaton Vance

 

Calvert

BMO Global Asset Management (Asia) Ltd.

 

Ameritas Investment Partners, Inc.

Goldman Sachs Asset Management, L.P.

 

Federated Hermes, Inc.

Richard Bernstein Advisors LLC

 

Milliman Financial Risk Management LLC

 

 

 

 

 

________________________________________________________

(2)Includes managed assets of Calvert Equity Fund, which is sub-advised by Atlanta Capital, and Calvert-sponsored funds managed by unaffiliated third-party advisers under Calvert supervision.

(3)Eaton Vance holds a 49 percent interest in Hexavest Inc. Other than Eaton Vance-sponsored funds for which Hexavest is adviser or sub-adviser, the managed assets of Hexavest are not included in our consolidated totals.

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Investment Vehicles

 

Our consolidated assets under management are broadly diversified by distribution channel and investment vehicle. The following table sets forth our consolidated assets under management by investment vehicle:

 

Consolidated Assets under Management by Investment Vehicle(1)

 

 

 

October 31,

 

 

 

 

% of

 

 

 

% of

 

 

 

% of

(in millions)

 

2020

Total

 

 

2019

Total

 

 

2018

Total

Open-end funds

$

108,576

21%

 

$

105,043

21%

 

$

102,426

24%

Closed-end funds

 

23,098

4%

 

 

24,284

5%

 

 

23,998

5%

Private funds(2)

 

49,746

10%

 

 

44,741

9%

 

 

38,544

9%

Institutional separate accounts

 

163,677

32%

 

 

173,331

35%

 

 

153,996

35%

Individual separate accounts

 

170,640

33%

 

 

150,033

30%

 

 

120,339

27%

Total

$

515,737

100%

 

$

497,432

100%

 

$

439,303

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Consolidated Eaton Vance Corp. See table on page 49 for managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above.

(2)

Includes privately offered equity, fixed and floating-rate income, and alternative funds and collateralized loan obligation (CLO) entities.

 

Open-end Funds

As of October 31, 2020, our open-end fund lineup included equity funds, floating-rate loan funds, taxable fixed income funds, state and national municipal income funds, alternative funds and multi-asset funds sold to U.S. and non-U.S. investors.

 

Our family of equity funds includes a broad range of fundamental active and systematic strategies in a variety of equity styles and market caps, managed both with and without consideration of shareholder tax effects, as well as Calvert-sponsored index funds. Assets under management in active equity funds managed for pre-tax returns, active equity funds managed for after-tax returns and equity index funds totaled $41.7 billion, $5.3 billion and $4.7 billion, respectively, on October 31, 2020.

 

Since introducing our first floating-rate loan fund in 1989, we have consistently ranked as one of the largest managers of floating-rate loan funds distributed through financial intermediaries in the U.S. Assets under management in open-end floating-rate loan funds totaled $13.3 billion on October 31, 2020.

 

Our taxable fixed income funds cover a broad range of fixed income asset classes, including mortgage-backed securities, high-yield bonds, emerging market bonds, investment-grade bonds, short- and ultra-short duration income, and cash instruments. Assets under management in open-end taxable income funds totaled $28.2 billion on October 31, 2020.

 

Our family of municipal income mutual funds is one of the broadest in the industry, with 13 national and 17 state-specific funds in 16 different states. As of October 31, 2020, we managed $13.7 billion in open-end municipal income fund assets.

 

Our alternative funds include global macro absolute return strategies and commodity-linked investments. We currently offer two global macro absolute return funds in the U.S. and one outside the United States. Assets under management in open-end alternative funds totaled $6.4 billion on October 31, 2020.

 

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The donor-advised funds and planned-giving vehicles of U.S. Charitable Gift Trust (Gift Trust) are designed to give donors the ability to support qualified charities of their choosing and to provide income for life to income beneficiaries they designate in a simple, cost-effective and tax-efficient manner. Assets under management in the Gift Trust’s donor-advised funds and planned-giving vehicles, which are included in fund assets under management as described above, totaled $784.7 million at October 31, 2020.

 

Our Ireland- and Cayman Island-domiciled open-end funds offer a range of investment strategies to non-U.S. investors. At October 31, 2020, managed assets in funds sold outside the U.S., which are included in fund assets under management as described above, totaled $1.7 billion.

 

As of October 31, 2020, 70 Calvert, Eaton Vance and Parametric-branded mutual funds offered in the U.S. were rated 4 or 5 stars by Morningstar for at least one class of shares, including 32 five-star rated funds. A good source of performance-related information for our funds is their websites, available at www.calvert.com and www.eatonvance.com. Information on these websites is not incorporated by reference into this Annual Report on Form 10-K. On our funds’ websites, investors can also obtain other current information about our funds, including investment objective and principal investment policies, portfolio characteristics, expenses and Morningstar ratings.

 

Closed-end Funds

Our family of closed-end funds includes national and state-specific municipal bond, domestic and global equity, bank loan, multi-sector income and taxable income funds, three of which are term trusts. As of October 31, 2020, we managed $23.1 billion in closed-end fund assets, ranking as the third-largest manager of U.S. exchange-listed closed-end funds, according to Strategic Insight, a fund industry data provider.

 

Private Funds

Our private fund category consists primarily of privately offered equity funds designed to meet the diversification and tax-management needs of qualifying high-net-worth investors. We are recognized as a market leader for these types of funds, which had $31.7 billion of assets under management as of October 31, 2020. Also included in private funds are a range of equity, floating-rate income, fixed income and alternative funds offered primarily to institutional investors. Assets under management in these funds totaled $15.4 billion as of October 31, 2020. CLO entity assets included in the private fund category totaled $2.6 billion at October 31, 2020.

 

Institutional Separate Accounts

We serve a broad range of clients in the institutional marketplace, both in the U.S. and internationally, including government, corporate and union retirement plans, endowments and foundations, nuclear decommissioning trusts, asbestos litigation trusts, sovereign wealth funds and investment funds sponsored by others for which we serve as a sub-adviser. Our diversity of capabilities allows us to offer domestic and international institutional investors a broad spectrum of equity, fixed and floating-rate income, alternative and multi-asset strategies, as well as portfolio implementation and overlay services.

 

We have used EVTC, a non-depository trust company, as a platform to launch a series of commingled funds tailored to meet the needs of smaller institutional clients. EVTC also affords us the opportunity to participate in qualified plan commingled investment platforms offered in the broker-dealer channel. In addition to investment management services, EVTC provides certain custody services and has obtained regulatory approval to provide institutional trustee services.

 

Institutional separate account assets under management totaled $163.7 billion at October 31, 2020.

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Individual Separate Accounts

Individual separate accounts are separately managed accounts offered to individual investors through intermediary distribution platforms. According to a report from the Money Management Institute and Cerulli Associates, as of calendar year-end 2019 we were the largest manager of individual separate accounts in the U.S. Our individual separate account assets consist primarily of Parametric Custom Core equity and laddered municipal bond and corporate bond portfolios, which had assets under management of $92.5 billion and $35.4 billion, respectively, as of October 31, 2020. These market-leading offerings combine the benefits of benchmark-based investing with the ability to customize portfolios to meet individual preferences and needs. In fiscal 2020, Parametric introduced Custom Core fixed income to provide investors with a customized, index-based approach to fixed income investing similar to Custom Core equity separate accounts.

 

In October 2020, we completed the purchase of the business assets of WaterOak, a wealth management firm headquartered in Winter Park, Florida, with $2.3 billion of client assets under management. WaterOak has been combined with Eaton Vance Investment Counsel to form Eaton Vance WaterOak. Through Eaton Vance WaterOak, we offer personalized wealth management services to high-net-worth individuals, families and institutions. Eaton Vance WaterOak investment counselors work directly with clients to establish long-term financial programs and implement strategies designed to achieve their objectives. The Company has been in the wealth management business since the founding of our predecessor Eaton and Howard in 1924.

 

Individual separate account assets under management totaled $170.6 billion at October 31, 2020.

 

Investment Management and Related Services

 

Our direct and indirect wholly-owned subsidiaries EVM and BMR are investment advisers to Eaton Vance and Parametric-branded funds, and Calvert is investment adviser to the Calvert funds. Although the specifics of our fund advisory agreements vary, the basic terms are similar. Pursuant to the advisory agreements, EVM, BMR or Calvert provides overall investment management services to each internally advised fund, subject, in the case of funds that are registered under the Investment Company Act of 1940 (1940 Act) (Registered Funds), to the supervision of each fund’s board of trustees or directors (together, trustees) in accordance with the fund’s investment objectives and policies. Parametric, Atlanta Capital, Hexavest and unaffiliated advisory firms act as sub-adviser to EVM, BMR or Calvert for certain funds.

 

EVM provides administrative services, including personnel and facilities, necessary for the operation of all Eaton Vance and Parametric-branded funds, and Calvert provides such services for the Calvert funds, subject to the oversight of each fund’s board of trustees. For certain funds, administrative services are provided under comprehensive management agreements that also include investment advisory services; other funds have separate administrative services agreements. Administrative services include recordkeeping, preparing and filing documents required to comply with federal and state securities laws, routine legal, fund administration and compliance services, supervising the activities of the funds’ custodians and transfer agents, providing assistance in connection with the funds’ shareholder meetings and other administrative services, including providing office space and office facilities, equipment and personnel that may be necessary for administering the business affairs of the funds. Each agreement remains in effect indefinitely, subject to, in the case of Registered Funds, annual approval by each fund’s board of trustees. The funds generally bear all expenses associated with their operation and the issuance and redemption or repurchase of their securities, except for the compensation of trustees and officers of the fund who are employed by us. For certain sponsored funds, EVM, BMR or Calvert waives a portion of its management fee and/or has agreed to reimburse some expenses of the fund.

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For Registered Funds, a majority of the independent trustees (i.e., those unaffiliated with the fund, its investment adviser and otherwise not an interested person under the 1940 Act) must approve the continuation of investment advisory and administrative agreements annually. The fund trustees generally may terminate these agreements upon 30 to 60 days’ notice without penalty. Shareholders of Registered Funds generally must approve amendments to the investment advisory agreements.

 

EVM, Calvert, EVTC and Eaton Vance WaterOak each has entered into an investment advisory agreement with the Gift Trust and/or related entities. The Gift Trust has a distribution agreement with EVD that compensates EVD for certain fundraising and servicing activities. EVTC also serves as trustee of the Gift Trust and related entities.

 

Either EVM, Parametric, Atlanta Capital, Calvert, BMR or Eaton Vance WaterOak has entered into an investment advisory agreement for each separately managed account that sets forth the account’s investment objectives and fee schedule, and provides for management of assets in the account in accordance with the stated investment objectives. Our separate account portfolio managers may assist clients in formulating investment strategies.

 

EVTC is trustee of each collective investment trust we sponsor. As trustee, EVTC is responsible for designing and implementing each trust’s investment program or overseeing sub-advisers engaged to manage the trust’s investment portfolio. EVTC also provides certain administrative and accounting services to each trust. For services provided under each trust’s declaration of trust, EVTC receives a monthly fee based on the average daily net assets of the trust.

 

Investment counselors and separate account portfolio managers employed by our subsidiaries make investment decisions for the separate accounts we manage, tailoring portfolios to the needs of particular clients. We generally receive investment advisory fees for separate accounts quarterly, based on the value of the assets managed on a particular date, such as the first or last calendar day of a quarter, or, in some cases, on the average assets for the period. These advisory contracts are generally terminable upon 30 to 60 days’ notice without penalty.

 

The following table shows our management fees earned:

 

 

 

 

Years Ended October 31,

(in thousands)

 

2020

 

2019

 

2018

Investment advisory fees:

 

 

 

 

 

 

Funds

$

949,448

$

930,150

$

940,655

Separate accounts

 

502,979

 

465,060

 

444,206

Administrative fees:

 

 

 

 

 

 

Funds

 

61,961

 

68,733

 

74,325

Total management fees

$

1,514,388

$

1,463,943

$

1,459,186

 

Marketing and Distribution

 

We market and distribute shares of Calvert, Eaton Vance and Parametric-branded funds domestically through EVD. EVD generally sells fund shares through a network of financial intermediaries, including national and regional broker-dealers, banks, registered investment advisors, insurance companies and financial planning

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firms. The Eaton Vance International (Ireland) Funds are UCITS funds domiciled in Ireland and sold by EVMI through certain intermediaries and directly to investors who are citizens of the U.K., member nations of the European Union (E.U.) and other countries outside the United States. The Eaton Vance International (Cayman Islands) Funds are Cayman Islands-domiciled funds sold by EVD and EVMI through intermediaries to non-U.S. investors.

 

Although the firms in our domestic intermediary distribution network have each entered into selling agreements with EVD, these agreements (which generally are terminable by either party) do not legally obligate the firms to sell any specific amount of our funds, investment strategies and services. EVD currently maintains a sales force of approximately 110 external and internal wholesalers who work closely with financial advisors in the intermediary distribution network to assist in placing Calvert, Eaton Vance and Parametric-branded funds.

 

Certain sponsored mutual funds have adopted distribution plans as permitted by the 1940 Act that provide for the fund to pay EVD distribution fees for the sale and distribution of shares and service fees for personal and/or shareholder account services (12b-1 fees). Each distribution plan with EVD for the Registered Funds is initially approved and its subsequent continuance must be approved annually by the board of trustees of the respective fund, including a majority of the independent trustees.

 

EVD makes payments to financial intermediaries that provide marketing support, shareholder recordkeeping and transaction processing, and/or administrative services to the Calvert, Eaton Vance and Parametric-branded mutual funds. Payments are typically based on fund net assets, fund sales and/or number of accounts attributable to that financial intermediary. Registered Funds may pay all or a portion of shareholder recordkeeping and transaction processing and/or administrative services provided to their shareholders. Financial intermediaries also may receive payments from EVD in connection with educational or due diligence meetings that include information concerning funds and accounts we manage.

 

EVD currently sells Calvert, Eaton Vance and Parametric-branded mutual funds under six primary pricing structures: front-end load commission (Class A); level-load commission (Class C); Calvert variable product pricing (Class F); institutional no-load (Class I, Class R6, and Institutional Class, referred to herein as Class I); intermediary no-load (Investor Class and Advisers Class, referred to herein as Class N); and retirement plan level-load (Class R).

 

For Class A shares, the shareholder may be required to pay a sales charge to the selling broker-dealer of up to five percent and an underwriting commission to EVD of up to 75 basis points of the gross value of the shares sold. Under certain conditions, funds waive the sales load on Class A shares and the shares are sold at net asset value. EVD generally receives (and then pays to authorized firms after one year) a distribution and service fee of up to 30 basis points annually of average net assets of Class A shares outstanding. In recent years, most of our sales of Class A shares have been made on a load-waived basis through fee-based programs. EVD does not receive underwriting commissions on such sales.

 

For Class C shares, the shareholder pays no front-end commissions but may be subject to a contingent deferred sales charge on redemptions made within the first 12 months of purchase. EVD pays a commission and the projected first-year service fees to the selling broker-dealer at the time of sale. The fund makes monthly distribution plan and service fee payments to EVD at an annual rate of up to 75 basis points and 25 basis points, respectively, of average net assets of the Class. EVD retains the distribution and service fees paid to EVD for the first 12 months and pays the distribution and service fees to the selling broker-dealer after one year.

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Class F shares of Calvert variable products are offered at net asset value and are not subject to any sales charges. EVD receives, and then generally pays to selling broker-dealers, distribution fees of up to 25 basis points of average daily net assets annually.

 

Class I shares are offered at net asset value and are not subject to any sales charges, underwriter commissions, distribution fees or service fees. For designated Class I shares, a minimum investment of $250,000 or higher is normally required. Designated Institutional Class shares are normally subject to a minimum investment of $50,000. Sales of R6 shares are limited to participating retirement plans and certain other investors.

 

Class N shares are offered at net asset value and are not subject to any sales charges or underwriter commissions. EVD receives (and then generally pays to selling broker-dealers after one year) combined distribution and service fees of 25 basis points of average net assets annually.

 

Class R shares are offered to retirement accounts at net asset value with no front-end sales charge. The Company receives, and then generally pays to selling broker-dealers, distribution fees of 25 basis points and service fees of 25 basis points of average net assets annually.

 

We also sponsor unregistered equity funds that are privately placed by EVD, as placement agent, and by various financial intermediaries to whom EVD and the subscribing shareholders may make sales commission payments. The privately placed equity funds are managed by EVM and BMR.

 

The marketing and distribution of investment strategies to institutional clients is subsidiary-specific. EVM has institutional sales, consultant relations and client service teams dedicated to supporting the U.S. marketing and sales of strategies managed by EVM, Calvert and Hexavest. Hexavest maintains its own marketing and distribution team to service institutional clients in Canada. Parametric and Atlanta Capital each maintain separate marketing and distribution teams to sell their respective investment strategies to U.S.-based institutions. EVMI is otherwise responsible for the institutional marketing and distribution of all EVM, Parametric, Atlanta Capital, Calvert and Hexavest-advised strategies to institutions outside of North America.

 

In June 2019, we announced a strategic initiative involving Parametric, EVM and EVD to further strengthen our leadership positions in rules-based, systematic investment strategies, customized individual separate accounts and wealth management solutions. As part of this initiative, we integrated under EVD the sales teams serving our clients and business partners in the registered investment advisor and multi-family office market. The combined team supports the sales and servicing of all of our investment strategies in this channel.

 

During the fiscal year ended October 31, 2020, we did not have any customers that provided over 10 percent of our total revenue.

 

Regulation

 

EVM, Parametric, Atlanta Capital, Calvert, BMR, Eaton Vance WaterOak and EVAIL are each registered with the SEC under the Advisers Act. The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary duties, recordkeeping requirements, operational requirements and disclosure obligations. Most Calvert, Eaton Vance and Parametric-branded funds are registered with the SEC under the 1940 Act. The 1940 Act imposes additional obligations on fund advisers, including governance, compliance, reporting and fiduciary obligations relating to the management of funds. Except for privately offered funds and exchange-listed funds exempt from registration, each U.S. fund is also required to make notice filings with most states

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and U.S. territories where it is offered for sale. Virtually all aspects of our investment management business in the U.S. are subject to various federal and state laws and regulations. These laws and regulations are primarily intended to benefit shareholders of the funds and separate account clients, and generally grant supervisory agencies and bodies broad administrative powers, including the power to limit or restrict us from carrying on our investment management business in the event we fail to comply with such laws and regulations. In such event, the possible sanctions that may be imposed include the suspension of individual employees, limitations on EVM, Parametric, Atlanta Capital, Calvert, BMR, Eaton Vance WaterOak, EVMI and EVAIL engaging in the investment management business for specified periods of time, the revocation of any such company’s registration as an investment adviser and other censures or fines.

 

In June 2019, the SEC adopted rules and interpretations designed to enhance the protections of retail investors in their relationships with financial professionals, including broker-dealers and investment advisors. These rules included Regulation Best Interest and Form Client Relationship Summary (Form CRS). Regulation Best Interest, which took effect on June 30, 2020, imposes a “best interest” standard of conduct for broker-dealers and their representatives and enhances the “suitability” standard previously applicable to broker-dealers by imposing an explicit care obligation and additional disclosure and conflict of interest mitigation or elimination requirements on broker-dealers that make securities recommendations to retail investors. In addition to the SEC’s activity, several states have adopted or are considering rules that would establish heightened or more express standards of conduct for broker-dealers and investment advisors operating in such states. It is uncertain how these state initiatives will be affected by the implementation of Regulation Best Interest and possible pre-emption challenges. Form CRS requires broker-dealers and registered investment advisors to provide a brief relationship summary to retail investors, including (i) the types of client and customer relationships and services we offer, (ii) the fees, costs, conflicts of interest and required standard of conduct associated with those relationships and services, (iii) whether we or any of our financial professionals currently have reportable legal or disciplinary history, and (iv) how to obtain additional information.

 

Under a final rule and interpretive guidance issued by the Financial Stability Oversight Council (FSOC) in April 2012, certain non-bank financial companies have been designated for the Federal Reserve’s supervision as systemically important financial institutions (SIFIs). Additional non-bank financial companies, which may include large asset management companies such as us, may be designated as SIFIs in the future. If the Company were designated a SIFI, it would be subject to enhanced prudential measures, which could include capital and liquidity requirements, leverage limits, enhanced public disclosures and risk management requirements, annual stress testing by the Federal Reserve, credit exposure and concentration limits, supervisory and other requirements. These heightened regulatory obligations could, individually or in the aggregate, adversely affect our business and operations.

 

EVM, Parametric and BMR are registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) as Commodity Pool Operators and Commodity Trading Advisors; other subsidiaries of the Company claim exemptions from registration. In 2013, the CFTC adopted rules for operators of registered mutual funds that are subject to registration as Commodity Pool Operators, generally allowing such funds to comply with SEC disclosure, reporting and recordkeeping rules as the means of complying with CFTC’s similar requirements. These CFTC rules do not, however, relieve registered Commodity Pool Operators from compliance with applicable anti-fraud provisions and certain performance reporting and recordkeeping requirements. We may incur ongoing costs associated with monitoring compliance with these requirements, including, but not limited to, CFTC and NFA registration and exemption obligations and the periodic reporting requirements of Commodity Pool Operators and Commodity Trading Advisors.

 

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Our mutual funds, privately offered funds and separate accounts that trade CFTC-regulated instruments are also regulated by the CFTC. In the event that EVM, Parametric or BMR fails to comply with applicable requirements, the CFTC may suspend or revoke its registration, prohibit it from trading or doing business with registered entities, impose civil penalties, require restitution and seek fines or imprisonment for criminal violations. In the event that clients on whose behalf we trade CFTC-regulated instruments fail to comply with requirements applicable to their trading, they would be subject to the foregoing remedies excluding suspension of license (provided they are not registered). In addition, to the extent any of the entities trade on a futures exchange or Swap Execution Facility, they would be subject to possible sanction for any violation of the facility’s rules.

 

EVTC is registered as a non-depository Maine Trust Company and is subject to regulation by the State of Maine Bureau of Financial Institutions (Bureau of Financial Institutions). EVTC is subject to certain capital requirements, as determined by the Examination Division of the Bureau of Financial Institutions. At periodic intervals, regulators from the Bureau of Financial Institutions examine the Company’s and EVTC’s financial condition as part of their legally prescribed oversight function. There were no violations by EVTC of these capital requirements in fiscal 2020 or prior years.

 

EVD is registered as a broker-dealer under the Exchange Act and is subject to regulation by the Financial Industry Regulatory Authority (FINRA), the SEC and other federal and state agencies. EVD is subject to the SEC’s net capital rule designed to enforce minimum standards regarding the general financial condition and liquidity of broker-dealers. Under certain circumstances, this rule may limit our ability to make withdrawals of capital and receive dividends from EVD. EVD’s regulatory net capital consistently exceeded minimum net capital requirements during fiscal 2020. The securities industry is one of the most highly regulated in the United States, and failure to comply with related laws and regulations can result in the revocation of broker-dealer licenses, the imposition of censures or fines, and the suspension or expulsion from the securities business of a firm, its officers or employees.

 

EVMI is regulated in the U.K. by the FCA as an authorized firm under a Markets in Financial Instruments Directive (MiFID) license to conduct regulated business. EVMI’s primary business purpose is to distribute investment strategies and services in Europe and other non-U.S. markets. Under the Financial Services and Markets Act 2000 (FSMA), EVMI is subject to certain liquidity and capital requirements. Such requirements may limit our ability to make withdrawals of capital from EVMI. In addition, failure to comply with such requirements could jeopardize EVMI’s approval to conduct business in the U.K. There were no violations by EVMI of the liquidity and capital requirements in fiscal 2020 or prior years.

 

EVAIL is regulated by the FCA as a Full Scope Alternative Investment Fund Manager. EVAIL’s primary business is conducting discretionary investment management services. Under FSMA, EVAIL is subject to certain liquidity and capital requirements, which may limit our ability to make withdrawals of capital from EVAIL. Failure to comply with such requirements could jeopardize EVAIL’s approval to conduct business in the U.K. There were no violations by EVAIL of the liquidity and capital requirements in fiscal 2020 or prior years.

 

EVGA is regulated by the Central Bank of Ireland as a UCITS Management Company with Individual Portfolio Management permissions. EVGA’s primary business purpose is to provide management services to EV UCITS Funds and U.S.-domiciled accounts via Memorandum of Understanding as a Participating Affiliate. EVGA is subject to certain liquidity and capital requirements, which may limit our ability to make withdrawals of capital from EVGA. There were no violations by EVGA of the liquidity and capital requirements in fiscal 2020 or prior years.

 

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EVMIA is regulated in Singapore by the MAS. EVMIA’s primary business purpose is to conduct investment management activities and distribute investment strategies. Under MAS, EVMIA is subject to certain liquidity and capital requirements, which may limit our ability to make withdrawals of capital from EVMIA. There were no violations by EVMIA of the liquidity and capital requirements in fiscal 2020 or prior years.

 

Our officers, directors and employees may from time to time own securities that are held by one or more of the funds and separate accounts we manage. Our internal policies with respect to individual investments by investment professionals and other employees with access to investment information require prior clearance of most types of transactions and reporting of all securities transactions, and restrict certain transactions to seek to avoid possible conflicts of interest. All employees are required to comply with all prospectus restrictions and limitations on purchases, sales or exchanges of shares of our mutual funds, and to pre-clear purchases and sales of shares of our closed-end funds.

 

Competition

 

The investment management business is a highly competitive global industry. We are subject to substantial competition in each of our principal investment classifications and distribution channels. There are few barriers to entry for new firms, and consolidation within the industry continues to alter the competitive landscape. According to the Investment Company Institute, there were approximately 830 fund sponsors at the end of calendar 2019 that competed in the U.S. mutual fund market. We compete with these firms, many of which have substantially greater resources, on the basis of investment performance, diversity of offered strategies, distribution capability, scope and quality of service, fees charged, reputation and the ability to develop new investment strategies and services to meet the changing needs of investors.

 

In recent years, investor demand for passive investment strategies, such as those employed by index mutual funds and index ETFs, has outpaced the demand for higher-fee actively managed investment strategies. Across many asset classes, actively managed strategies as a whole are experiencing net outflows. While our suite of customized, benchmark-based separate account offerings is positioned to benefit from market demand for passive investment strategies, a large majority of our management fee revenue is derived from active strategies. The continuing shift in market demand toward index funds and other passive strategies reduces opportunities for active managers and may accelerate fee compression.

 

In the intermediary channel, we compete with other mutual fund management, distribution and service companies that distribute through affiliated and unaffiliated sales forces, broker-dealers and direct sales to the public. According to the Investment Company Institute, at the end of calendar 2019 there were over 10,000 registered open-end funds whose shares were being offered to the public in the U.S. We rely primarily on unaffiliated financial intermediaries to distribute our funds, and pursue sales relationships with all types of intermediaries to broaden our distribution network. A failure to maintain strong relationships with intermediaries that distribute our funds could adversely affect our gross and net sales, assets under management, revenue and financial condition.

 

We are also subject to substantial competition from other investment management firms in separate account channels. Financial intermediaries sponsoring managed account programs generally limit the number of approved managers within their programs, and firms compete based on investment performance and other considerations to win and maintain positions in these programs. For institutional separate accounts, we compete with other investment management firms based on the breadth of investment strategies and services offered, investment performance, strength of reputation, price and the scope and quality of client service.

 

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Human Capital

 

On October 31, 2020, we and our wholly- and majority-owned subsidiaries had 1,983 full-time and part-time employees. On October 31, 2019, the comparable number was 1,871.

 

We focus on attracting, developing and retaining a team of highly talented and motivated employees. We conduct regular assessments of our compensation and benefit practices and pay levels to help ensure that staff members are compensated fairly and competitively. We devote extensive resources to staff training and development, including tuition assistance for career-enhancing academic and professional programs. We sponsor a year-long leadership development program for managers identified as high-potential future leaders. Individual goals are set annually for each employee, and attainment of those goals is an element of the employee’s performance assessment. We recognize that the success of our Company is based on the talents and dedication of those we employ, and we are highly invested in their success.

 

Available Information

 

We make available free of charge our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13 and 15(d) of the Exchange Act as soon as reasonably practicable after such filing has been made with the SEC. The SEC makes available at www.sec.gov reports, proxy and information statements, and other information filed by issuers with the SEC. The Company’s SEC reports may also be viewed and obtained on our website at www.eatonvance.com, or by calling Investor Relations at 617-482-8260. We have included our website address in this Annual Report on Form 10-K as an inactive textual reference only. Information on our website is not incorporated by reference into this Annual Report on Form 10-K.

 

Item 1A. Risk Factors

 

Risks Related to the Proposed Merger with Morgan Stanley

 

On October 7, 2020, we entered into an Agreement and Plan of Merger (the Merger Agreement) with Morgan Stanley (Morgan Stanley), Mirror Merger Sub 1, Inc., a wholly owned subsidiary of Morgan Stanley (Merger Sub 1), and Mirror Merger Sub 2, LLC, a wholly owned subsidiary of Morgan Stanley (Merger Sub 2), pursuant to which (i) Merger Sub 1 will merge with and into Eaton Vance (the First Merger), with Eaton Vance surviving as a wholly owned subsidiary of Morgan Stanley, and (ii) immediately following the completion of the First Merger, the surviving corporation from the First Merger will merge with and into Merger Sub 2 (the Second Merger and, together with the First Merger, the Mergers), with Merger Sub 2 surviving the Second Merger and continuing as a wholly owned direct subsidiary of Morgan Stanley. For more information regarding the proposed Mergers, you can read the information statement/prospectus filed on Form S-4 by Morgan Stanley on December 4, 2020 and the documents incorporated by reference therein and referred to therein under the caption “Where You Can Find More Information.”

 

The price of Morgan Stanley Common Stock might decline prior to the completion of the Mergers, which would reduce the value of the Merger Consideration (as defined below) to be received by our shareholders pursuant to the Merger Agreement. The market price of Morgan Stanley Common Stock at the time the Mergers are completed may vary significantly from the price on the date of the Merger Agreement. Upon completion of the Mergers, our shareholders will be entitled to receive for each share of Eaton Vance Non-Voting Common Stock and Eaton Vance Voting Common Stock (together, Eaton Vance Common Stock) that they own, at the election of each shareholder, subject to automatic adjustment, consideration in the form of a

20


 

combination of Morgan Stanley Common Stock and cash (Mixed Consideration), only cash (Cash Consideration) or only Morgan Stanley Common Stock (Stock Consideration) (the consideration such holder elects, the Merger Consideration). The aggregate amount of Merger Consideration payable in cash is fixed at $28.25 per share of Eaton Vance Common Stock and aggregate amount of Merger Consideration payable in Morgan Stanley Common Stock is fixed at 0.5833 shares of Morgan Stanley Common Stock per Share of Eaton Vance Common Stock. The aggregate amount of Merger Consideration will not be adjusted for changes in the stock prices of either company before the Mergers are completed. Even if an Eaton Vance shareholder elects to receive all cash in the Mergers, the amount of cash to which such shareholder is entitled will depend on the price of Morgan Stanley Common Stock at the time the Mergers are completed. As a result, any changes in the market price of Morgan Stanley Common Stock before the Mergers are completed will have a corresponding effect on the market value of the Merger Consideration received. Neither party has a right to terminate the Merger Agreement based solely (and in and of itself) upon changes in the market price of Morgan Stanley Common Stock or Eaton Vance Non-Voting Common Stock.

 

The market price of Morgan Stanley Common Stock after the Mergers will be affected by factors different from those affecting the market price of Eaton Vance Common Stock, and may decline. Upon completion of the Mergers, holders of shares of Eaton Vance Common Stock will become holders of shares of Morgan Stanley Common Stock. The businesses of Morgan Stanley differ from our business in important respects; accordingly, the results of operations of Morgan Stanley after the Mergers, as well as the market price of Morgan Stanley Common Stock, will be affected by factors different from those affecting our results of operations.

 

Additionally, the market price of Morgan Stanley Common Stock may fluctuate significantly following completion of the Mergers, and holders of Eaton Vance Common Stock could lose the value of their investment in Morgan Stanley Common Stock. The issuance of shares of Morgan Stanley Common Stock in the Mergers could on its own have the effect of depressing the market price for Morgan Stanley Common Stock. In addition, many of our shareholders may decide not to hold the shares of Morgan Stanley Common Stock they receive as a result of the Mergers. Other Eaton Vance shareholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of Morgan Stanley Common Stock they receive as a result of the Mergers. Any such sales of Morgan Stanley Common Stock could have the effect of depressing the market price for Morgan Stanley Common Stock.

 

Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, the Morgan Stanley Common Stock, regardless of Morgan Stanley’s actual operating performance.

 

We may have difficulty attracting, motivating and retaining executives and other employees in light of the Mergers. Uncertainty about the effect of the Mergers on our employees may impair our ability to attract, retain and motivate personnel. Employee retention may be particularly challenging during the pendency of the Mergers, as our employees may experience uncertainty about their future roles with the combined business. In addition, pursuant to the terms of the Merger Agreement, upon obtaining Eaton Vance Stockholder Approval (as defined in the Merger Agreement) (which approval was obtained on October 7, 2020), each share of our restricted stock and each restricted stock unit award that was then outstanding vested in full and was settled in unrestricted shares of our Non-Voting Common Stock. The accelerated vesting of restricted stock awards and restricted stock unit awards could result in key employee departures. If our employees depart, the integration of the companies may be more difficult and the combined business following the Mergers may be harmed, and the anticipated benefits of the Mergers may be adversely affected.

 

Completion of the Mergers is subject to many conditions; if these conditions are not satisfied or waived, the Mergers will not be completed. The obligation of each of Morgan Stanley, Eaton Vance, Merger Sub 1 and

21


 

Merger Sub 2 to complete the Mergers is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of a number of conditions, including, among others: (i) the Eaton Vance Stockholder Approval (which approval was obtained on October 7, 2020), (ii) (A) the expiration or termination of any applicable waiting period, or any extension thereof, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) (in respect of which early termination was granted on November 10, 2020) and (B) certain governmental filings and/or approvals having been made, obtained or received (or the waiting periods with respect thereto having expired or been terminated), as applicable (in the case of Morgan Stanley’s, Merger Sub 1’s and Merger Sub 2’s obligations to complete the Mergers, without the imposition of a requirement that Morgan Stanley or any of its subsidiaries (including Eaton Vance or our subsidiaries) take any action or comply with any restriction that Morgan Stanley would not be required to take or comply with under the applicable provisions of the Merger Agreement and there being no pending litigation or similar legal action by any governmental authority in each case that seeks to impose a requirement that Morgan Stanley or any of its subsidiaries (including Eaton Vance or our subsidiaries) take any action or comply with any restriction that Morgan Stanley would not be required to take or comply with under the applicable provisions of the Merger Agreement), (iii) absence of (x) any applicable law or order preventing or making illegal the consummation of the Mergers or any of the other transactions contemplated by the Merger Agreement and (y) any litigation or similar legal action by any governmental authority (in any jurisdiction in which Morgan Stanley, Eaton Vance or any of our respective subsidiaries conducts material operations) seeking to prohibit or restrain the Mergers, (iv) approval for the listing on the NYSE of the shares of Morgan Stanley Common Stock to be issued in the Mergers, subject to official notice of issuance, (v) in the case of Morgan Stanley’s, Merger Sub 1’s and Merger Sub 2’s obligations to complete the Mergers, the accuracy of the representations and warranties made in the Merger Agreement by us and, in the case of our obligation to complete the Merger, the accuracy of the representations and warranties made in the Merger Agreement by Morgan Stanley, in each case, as of the date of the Merger Agreement and as of the date of completion of the Mergers, subject to certain materiality thresholds, (vi) in the case of Morgan Stanley’s, Merger Sub 1’s and Merger Sub 2’s obligations to complete the Mergers, performance in all material respects by us of the obligations required to be performed by us at or prior to the effective time of the First Merger, and, in the case of our obligation to complete the Mergers, performance in all material respects by Morgan Stanley, Merger Sub 1 and Merger Sub 2 of the obligations required to be performed by them at or prior to the effective time of the First Merger, (vii) in the case of Morgan Stanley’s, Merger Sub 1’s and Merger Sub 2’s obligations to complete the Mergers, the absence since the date of the Merger Agreement of a material adverse effect on us, and, in the case of our obligation to complete the Mergers, the absence since the date of the Merger Agreement of a material adverse effect on Morgan Stanley, (viii) the receipt by Morgan Stanley of an opinion of Davis Polk, counsel to Morgan Stanley, to the effect that the Mergers, taken together as an integrated transaction, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (the Code), which opinion shall be dated the closing date; provided that if Davis Polk does not render such opinion for any reason, this condition will nonetheless be satisfied if a third party nationally recognized law or accounting firm as reasonably agreed by Morgan Stanley and us renders such opinion to Morgan Stanley, (ix) the receipt by us of an opinion of WilmerHale, counsel to Eaton Vance, to the effect that the Mergers, taken together as an integrated transaction, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code, which opinion shall be dated the closing date; provided that if WilmerHale does not render such opinion for any reason, this condition will nonetheless be satisfied if a third party nationally recognized law or accounting firm as reasonably agreed by Morgan Stanley and us renders such opinion to us and (x) our obtaining the consent of our clients generating an aggregate management fee revenue run-rate of at least 80% of our aggregate management fee revenue run-rate as of September 30, 2020.

 

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There can be no assurance that the conditions to the closing of the Mergers will be satisfied or waived or that the Mergers will be completed.

 

Our business relationships may be subject to disruption due to uncertainty associated with the Mergers. Parties with which we do business may experience uncertainty associated with the Mergers, including with respect to current or future business relationships with Eaton Vance or the combined business. Our business relationships may be subject to disruption as parties with which we do business may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than Eaton Vance or the combined business. These disruptions could have an adverse effect on the parties’ ability to complete the Mergers and the businesses, financial condition, results of operations or prospects of the combined business following in the Mergers, including an adverse effect on the ability to realize the anticipated benefits of the Mergers. The risk, and adverse effect, of such disruptions could be exacerbated by a delay in completion of the Mergers or termination of the Merger Agreement.

 

Failure to complete the Mergers could adversely affect our stock price and future business and financial results. If the Mergers are not completed for any reason, the expected merger benefits will not be realized and our ongoing business may be adversely affected. Failure to complete the Mergers would subject us to a number of risks, including the following:

we may experience adverse reactions from the financial markets, including negative effects on our stock price;

we may experience adverse reactions from clients, regulators and employees;

we will be required to pay certain costs relating to the Mergers, whether or not the Mergers are completed;

the Merger Agreement places certain restrictions on the conduct of our business prior to completion of the Mergers, and such restrictions, the waiver of which are subject to the written consent of Morgan Stanley (in certain cases, not to be unreasonably withheld, conditioned or delayed), and subject to certain exceptions and qualifications, may prevent us from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Mergers that we would have made, taken or pursued if these restrictions were not in place; and

matters relating to the Mergers (including integration planning) will require substantial commitments of time and resources by our management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company.

 

In the event of a termination of the Merger Agreement under certain circumstances specified in the Merger Agreement, we may be required to pay a termination fee of $206 million to Morgan Stanley. To the extent that a termination fee is not promptly paid when due, we will also be required to pay any reasonable and documented costs and expenses (including reasonable legal fees and expenses) incurred by Morgan Stanley in connection with legal action taken to enforce the Merger Agreement that results in a judgment for such amount against us for failing to promptly pay such amount, together with interest on the unpaid fee.

 

There can be no assurance that the risks described above will not materialize. If any of those risks materialize, they may materially and adversely affect our business, financial condition, financial results, ratings, stock price and/or bond prices.

 

In addition, we could be subject to litigation related to any failure to complete the Mergers or related to any legal proceeding commenced against us to perform our obligations under the Merger Agreement. If the

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Mergers are not completed, these risks may materialize and may adversely affect our business, financial condition, financial results, debt ratings, stock price and/or market trading prices of our outstanding debt.

 

The shares of Morgan Stanley Common Stock to be received by our shareholders upon completion of the Mergers will have different rights from shares of Eaton Vance Common Stock. Upon completion of the Mergers, our shareholders will no longer be shareholders of Eaton Vance but will instead become shareholders of Morgan Stanley. Our shareholders’ rights as shareholders will, after completion of the Mergers, be governed by Delaware law (rather than Maryland law) and the terms of Morgan Stanley’s amended and restated certificate of incorporation and amended and restated bylaws are in some respects materially different than the terms of our amended and restated articles of incorporation and amended and restated bylaws, which currently govern the rights of our shareholders.

 

Our stockholders may receive a form or combination of consideration different from what they elect. While each holder of Eaton Vance Common Stock entitled to the Merger Consideration may elect to receive, in connection with the Mergers, the Mixed Consideration, Cash Consideration or Stock Consideration, the total amount of cash and the total number of shares of Morgan Stanley Common Stock available for all Eaton Vance shareholders will be fixed. Accordingly, depending on the elections made by other Eaton Vance shareholders, a holder of Eaton Vance Common Stock that elects to receive all cash in connection with the Mergers may receive a portion of the Merger Consideration in Morgan Stanley Common Stock and a holder of Eaton Vance Common Stock that elects to receive all Morgan Stanley Common Stock in connection with the Mergers may receive a portion of the Merger Consideration in cash.

 

Risks Related to the Management of Our Business

 

We are subject to substantial competition in all aspects of our investment management business. Our funds and separate accounts compete against a large number of investment strategies and services sold to the public by investment management companies, broker-dealers, registered investment advisors, banks, insurance companies and others. Many institutions we compete against have greater financial resources than us, and there are few barriers to entry. We compete with these firms on the basis of investment performance, diversity of offerings, distribution capability, scope and quality of services, reputation and the ability to develop new investment strategies and services to meet the changing needs of investors. To the extent that current or potential customers decide to invest in strategies sponsored by our competitors, the sales of our sponsored strategies, as well as our market share, revenue and net income, could decline. Our actively managed investment strategies compete not only against other active strategies, but also against similarly positioned index strategies. The continuing shift in market demand toward index funds and other passive strategies reduces opportunities for active managers and may accelerate fee compression as active managers reduce their fees to compete with lower-cost passive strategies. To the extent that trend continues, our business could be adversely affected.

 

The investment management industry is highly competitive and investment management customers are increasingly fee sensitive. In the event that competitors charge lower fees for substantially similar strategies and services, we may be forced to compete increasingly on the basis of price to attract and retain customers. Rules and regulations applicable to Registered Funds provide, in substance, that each investment advisory agreement between a fund and its investment adviser continues in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees. Periodic review of fund advisory agreements could result in a reduction in our advisory fee revenues from Registered Funds. Fee reductions on existing or future strategies and services could have an adverse impact on our revenue and net income.

 

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The inability to access clients through intermediaries could have a material adverse effect on our business. Our ability to market investment strategies and services is highly dependent on access to registered investment advisors and the distribution systems of national and regional broker-dealer firms, which generally offer competing strategies and services that could limit the distribution of our offerings. There can be no assurance that we will be able to retain access to these intermediaries. Losing such access could have a material adverse effect on our business. To the extent that existing or potential customers, including registered investment advisors and securities broker-dealers, decide to invest in or broaden distribution relationships with our competitors, the sales of our strategies and services, as well as our market share, revenue and net income, could decline. Certain intermediaries with which we conduct business charge us fees to maintain access to their distribution networks. If we choose not to pay such fees, our ability to distribute our strategies and services through those intermediaries would be limited.

 

Our investment advisory agreements are subject to termination on short notice or non-renewal. We derive almost all of our revenue from management fees, distribution income and service fees received from managed funds and separate accounts. As a result, we are dependent upon management contracts, administrative contracts, distribution contracts, underwriting contracts and/or service contracts under which these fees are paid. Generally, these contracts are terminable upon 30 to 60 days’ notice without penalty. If material contracts are terminated, not renewed or amended to reduce fees, our financial results could be adversely affected.

 

Our assets under management, which affect revenue, are subject to significant fluctuations. Our major sources of revenue, including investment advisory, administrative, distribution and service fees, are generally calculated as percentages of assets under management. Fee rates for our investment strategies and services generally vary by investment mandate (e.g., equity, fixed income, floating-rate income, alternative, portfolio implementation or exposure management services) and investment vehicle (e.g., fund or separate account). An adverse change in asset mix by mandate or vehicle, independent of our level of assets under management, may result in a decrease in our overall average effective fee rate. Any decrease in the level of our assets under management generally would reduce our revenue and net income. Assets under management could decrease due to, among other things, a decline in securities prices, a decline in the sales of our investment offerings, an increase in open-end fund redemptions or client withdrawals, repurchases of, or other reductions in, closed-end fund shares outstanding, or reductions in leverage used by investment vehicles. Adverse market conditions and/or lack of investor confidence in the financial markets could lead to a decrease in investor risk tolerance. A decrease in investor risk tolerance could result in investors withdrawing from markets or decreasing their rate of investment, thereby reducing our overall assets under management and adversely affecting our revenue, earnings and growth prospects. Changes in investor risk tolerance could also result in investor allocation away from higher-fee strategies to lower-fee strategies, which could adversely affect our revenue and earnings. Our overall assets under management may not change in tandem with overall market conditions, as changes in our assets under management may lag improvements or declines in the overall market due to mix effects and investment performance.

 

Poor investment performance of the assets we manage could affect our sales or reduce the amount of assets under management, adversely affecting revenue and net income. The performance of the assets we manage is critical to our success. Poor investment performance on an absolute basis or as compared to third-party benchmarks or competitors could lead to a decrease in sales and stimulate higher redemptions, thereby lowering the amount of assets under management and reducing the investment advisory fees we earn. A decline in investment performance of any investment franchise could have a material adverse effect on the level of assets under management, revenue and net income of that franchise. Past or present performance in the investment strategies we manage is not indicative of future performance.

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Our clients can withdraw the assets we manage on short notice, making our future client and revenue base unpredictable. Our open-end fund clients generally may redeem their investments in these funds each business day without prior notice. Institutional and individual separate account clients can terminate their relationships with us generally at any time. In a declining stock market, the pace of open-end fund redemptions and separate account withdrawals or terminations could accelerate. Poor performance of the assets we manage relative to other asset management firms could result in lower purchases and increased redemptions of open-end fund shares, and the loss of institutional and individual separate accounts. While not subject to daily redemption, closed-end funds that we advise may shrink in size due to repurchases of shares in open-market transactions or pursuant to tender offers, or in connection with distributions in excess of realized returns. Activist shareholders have through various means sought, and may continue to seek, to force certain closed-end funds for which we serve as investment adviser to conduct a share tender offer, convert to an open-end fund, liquidate or take other actions that would reduce or eliminate the fees we receive for managing such funds. A decrease in revenue that could result from any of these events could have a material adverse effect on our business.

 

We could be adversely affected by counterparty or client defaults. As we have seen in periods of significant market volatility, the deteriorating financial condition of a single financial institution may materially and adversely affect the performance of others. We, and the funds and accounts we manage, have exposure to many different counterparties and routinely execute transactions with counterparties across the financial industry. We, and the funds and accounts we manage, may be exposed to credit, operational or other risk in the event of a default by a counterparty or client, or in the event of other unrelated systemic market failures.

 

The COVID-19 pandemic may continue to have a material adverse effect on our business, results of operations, cash flows and financial condition. The ongoing COVID-19 pandemic has caused significant disruption in global financial markets and adversely affected our business. During the second quarter of fiscal 2020, we experienced a decline in our assets under management, revenue and earnings due to market price declines and net outflows driven by investor uncertainty related to the pandemic. While financial markets and our flow trends have since substantially recovered, the COVID-19 pandemic continues to significantly affect the manner in which we operate our business. While we have in place business continuity plans that address potential impacts of the COVID-19 pandemic to our personnel and our facilities, and technologies that enable our personnel to work effectively from home, no assurance can be given that the steps we have taken will continue to be effective or appropriate. While our employees have to date been able to continue conducting business while working remotely, operational challenges may arise in the future, which may reduce our organizational efficiency or effectiveness, and increase operational, compliance and cybersecurity risks. In addition, because most of our employees have not previously worked remotely for an extended period of time, we are unsure of the impact that the remote work environment and lack of in-person meetings with colleagues, clients and business partners will have on the growth of our business and the results of our operations over the long term. Many of the key service providers we rely on also have transitioned to working remotely. If we or they were to experience material disruptions in the ability of our or their employees to work remotely (e.g., from illness due to COVID-19 or disruption in internet-based communication systems and networks), our ability to operate our business could be materially adversely disrupted. Any such material adverse disruptions to our business operations could have a material adverse impact on our results of operations, cash flows or financial condition.

 

The extent to which our business, results of operations, cash flows and financial results are affected by the COVID-19 pandemic in the future will largely depend on future developments that cannot be accurately predicted and are uncertain, including the duration and severity of the pandemic and the length of time until

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the economy recovers and our employees can safely return to the workplace. In addition, many of the other risk factors described herein are heightened by the effects of the COVID-19 pandemic and related economic conditions, which could result in a material adverse effect on our business, results of operations, cash flows or financial condition.

 

Failure to maintain adequate infrastructure could impede our productivity and ability to support business growth. Our infrastructure, including our technological capacity, data centers and office space, is vital to the operations and competitiveness of our business. The failure to maintain an infrastructure commensurate with the size and scope of our business, including any expansion, could impede our productivity and growth, which could result in a decline in our earnings.

 

Failure to maintain adequate business continuity plans could have a material adverse impact on us and the investment strategies and services we offer. Significant portions of our business operations and those of our critical third-party service providers are concentrated in a few geographic areas, including Boston, Massachusetts and Seattle, Washington. Critical operations that are geographically concentrated in Boston and/or Seattle include trading operations, information technology, fund administration, and custody and portfolio accounting services for our investment offerings. Should we, or any of our critical service providers, experience a significant local or regional disaster or other business continuity problem, our continued success will depend in part on the safety and availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations. The failure by us, or any of our critical service providers, to maintain updated adequate business continuity plans, including backup facilities, could impede our ability to operate in the event of a disruption, which could cause our earnings to decline. We have developed various backup systems and contingency plans but cannot be assured that they will be adequate in all circumstances that could arise, or that material disruptions will not occur. In addition, we rely to varying degrees on outside vendors for disaster contingency support, and we cannot be assured that these vendors will be able to perform in an adequate and timely manner. If we, or any of our critical service providers, are unable to respond adequately to such an event in a timely manner, we may be unable to continue our business operations, which could lead to a damaged reputation and loss of customers that results in a decrease in assets under management, lower revenues and reduced net income.

 

We have pursued growth in the United States and abroad in part through acquisitions, which exposes us to risks inherent in assimilating new operations, expanding into new jurisdictions and executing on new development opportunities. Our growth strategy has included the acquisition of asset management businesses that we believe will add value to our business and generate positive net returns. This strategy may not be effective, and failure to successfully develop and execute such a strategy may decrease earnings and harm our competitive position. We cannot guarantee that we will identify and consummate any such transactions on acceptable terms or have sufficient resources to accomplish such a strategy. In addition, any strategic transaction can involve a number of risks, including additional demands on our staff; unanticipated problems regarding integration of operating facilities, technologies and new employees; and the existence of liabilities or contingencies not disclosed to or otherwise known by us prior to closing a transaction. As a result, we may not be able to realize net benefits from such transactions. In addition, we may be required to spend additional time or money on integration that would otherwise be spent on the development of our business.

 

Expansion into international markets and the introduction of new investment strategies and services increases our operational, regulatory and other risks. We continue to increase the scope of our investment offerings and the scale of our international business activities. As a result, we face increased operational, regulatory, compliance and reputational risks. The failure of our compliance and internal control systems to properly mitigate such additional risks, or of our operating infrastructure to support such expansion, could

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result in operational failures and regulatory fines or sanctions. Our operations in the U.K., the E.U., Australia, Singapore and other jurisdictions are subject to significant compliance, disclosure and other obligations. We incur additional costs to satisfy the requirements of the E.U. Directive on UCITS and other E.U. directives (together, the E.U. Directives). Compliance requirements relating to the E.U. Directives may also limit our operating flexibility and affect our ability to expand in European markets. Activity in international markets also exposes us to fluctuations in currency exchange rates, which may adversely affect the U.S. dollar value of revenues, expenses and assets associated with our business activities outside the United States. Actual and anticipated changes in current exchange rates may also adversely affect international demand for our investment strategies and services, most of which represent investments primarily in U.S. dollar-based assets. Because certain of our costs to support international business activities are based in local currencies, the profitability of such activities in U.S. dollar terms may be adversely affected by a weakening of the U.S. dollar versus other currencies in which we derive significant revenues.

 

On January 31, 2020, the U.K. withdrew from the E.U. (Brexit), with a transition period lasting until December 31, 2020. During the transition period, existing arrangements between the U.K. and the E.U. have remained in place while the U.K. and the E.U. seek to negotiate a free trade agreement that will govern the trading relationship between the U.K. and the E.U. following the transition period. The impact of Brexit on our business operations in the U.K. and Europe remains uncertain, and will vary depending on the future terms of trade between the U.K. and the E.U. Ongoing changes in the E.U.’s regulatory framework applicable to our operations, including Brexit as well as any other changes in the composition of the E.U.’s member states, may add additional complexity to our global operations, impede expansion and/or impose additional risks.

 

We may not manage risks associated with the replacement of financial benchmarks effectively. The withdrawal and replacement of widely used financial benchmarks such as the London Interbank Offered Rate (LIBOR) with alternative benchmarks introduces a number of risks for us, our clients and the financial services industry more widely. These include legal implementation risks, as extensive changes to documentation for new and existing clients and transactions may be required; financial risks arising from any changes in the valuation of financial instruments linked to benchmarks; pricing risks, as changes to benchmarks could impact pricing mechanisms on some instruments; operational risks, due to the potential requirement to adapt information technology systems, trade reporting infrastructure and operational processes; and relationship risks, relating to client communications and engagement during the transition away from LIBOR or other financial benchmarks currently utilized.

 

The FCA, which regulates LIBOR, has announced that it has commitments from panel banks to continue to contribute to LIBOR through the end of calendar 2021, but that the FCA will not use its powers to compel contributions beyond that date. Accordingly, there is considerable uncertainty regarding the publication of LIBOR beyond 2021. While it is not currently possible to determine precisely whether, or to what extent, the withdrawal and replacement of LIBOR would affect us, the implementation of alternative benchmark rates to LIBOR may have an adverse effect on our business, results of operations or financial condition.

 

Our success depends on key personnel, and our financial performance could be negatively affected by the loss of their services. Our success depends upon our ability to attract, retain and motivate qualified portfolio managers, analysts, investment counselors, sales and management personnel, and other key professionals, including our executive officers. Our key employees generally do not have employment contracts and may voluntarily terminate their employment at any time. Certain senior executives and the non-employee members of our Board of Directors are subject to our mandatory retirement policy at age 65 and age 74, respectively. In addition, pursuant to the terms of the Merger Agreement, upon obtaining Eaton Vance Stockholder Approval (which approval was obtained on October 7, 2020), each share of our restricted stock

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and each restricted stock unit award that was then outstanding vested in full and was settled in unrestricted shares of our Non-Voting Common Stock. The accelerated vesting of restricted stock awards could result in key employee departures. The loss of the services of key personnel or our failure to attract replacement or additional qualified personnel could negatively affect our financial performance. An increase in compensation to attract or retain personnel could result in a decrease in net income.

 

Our expenses are subject to fluctuations that could materially affect our operating results. Our results of operations are dependent on our level of expenses, which can vary significantly from period to period. Our expenses may fluctuate as a result of, among other things, variations in the level of compensation, expenses incurred to support distribution of our investment strategies and services, expenses incurred to develop new strategies and services, expenses incurred to enhance our technology, compliance and other infrastructure, impairments of intangible assets or goodwill, and the impact of inflation. Increases in our level of expenses, or our inability to reduce our level of expenses when necessary, could materially affect our operating results.

 

Our business is subject to operational risk. We are subject to the risk that we commit management or administration errors that cause us to incur financial losses and damage our reputation. Our customized separate account and exposure management services businesses may be particularly susceptible to losses from operational or trading errors because they involve large numbers of accounts and operate at generally low fee rates. In addition, our operations are dependent upon services and information from third parties, and operations problems at such third parties could materially affect our business. Many of the risks described herein, including those related to operations, cyber security, business continuity, international operations and legal and regulatory developments, also apply to the activities of the third parties with which we do business.

 

Our reputation could be damaged. We have built a reputation of high integrity, prudent investment management and superior client service. Our reputation is extremely important to our success. Any damage to our reputation could result in client withdrawals from funds or separate accounts that we manage and impede our ability to attract and retain key personnel. The loss of either client relationships or key personnel due to damage to our reputation could reduce the amount of assets we manage and cause us to suffer a loss in revenue and a reduction in net income. Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client or our affiliates. Failure to adequately address or disclose actual and/or potential conflicts of interest could adversely affect our reputation, results of operations and business prospects.

 

Our business may be negatively affected by adverse business decisions or our failure to properly implement or execute strategic programs and priorities. In order to maintain and grow our business, we must continuously make strategic decisions about our current and future business plans, including plans to target cost initiatives and enhance operational processes and efficiencies, to improve existing and to develop new service offerings and enhancements, to enter or exit business lines or geographic markets, to acquire or dispose of businesses, to build new systems, to migrate from existing systems and infrastructure, and to address staffing needs.

 

Support provided to developing new strategies and services may reduce fee income, increase expenses and expose us to potential loss on invested capital. We may support the development of new investment offerings by waiving all or a portion of the fees we receive, by subsidizing expenses or by making seed capital investments. Seed investments utilize Company capital that would otherwise be available for general corporate purposes and expose us to capital losses to the extent that realized investment losses are not offset by hedging gains. The risk of loss may be greater for seed capital investments that are not hedged, or if an

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intended hedge does not perform as expected. Failure to have or devote sufficient capital to support new investment offerings could have an adverse impact on our future growth.

 

We may need to raise additional capital or refinance existing debt in the future, and resources may not be available to us in sufficient amounts or on acceptable terms. Significant future demands on our capital include contractual obligations to service our debt and satisfy the terms of non-cancellable operating leases as described more fully under Contractual Obligations in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Annual Report on Form 10-K and in Note 9 in Item 8 of this Annual Report on Form 10-K. Although we believe our existing liquid assets, cash flows from operations and borrowing capacity under our credit facility are sufficient to meet our current and forecasted operating cash needs, our ability to satisfy our long-term contractual obligations may be dependent on our ability to access capital markets. Our ability to access capital markets efficiently depends on a number of factors, including the state of global credit and equity markets, interest rates, credit spreads and our credit ratings. If we are unable to access capital markets to issue new debt, refinance existing debt or sell shares of our Non-Voting Common Stock as needed, or if we are unable to obtain such financing on acceptable terms, our business could be adversely affected.

 

We could be subject to losses and reputational harm if we, or our agents, fail to properly safeguard sensitive and confidential information or as a result of cyber attacks. We are dependent on the effectiveness of our information and cyber security policies, procedures and capabilities, and those of third parties with which we do business, to protect our and their computer and telecommunications systems and the data that resides in, or is transmitted through, such systems. As part of our normal operations, we maintain and transmit confidential information about our clients and employees as well as proprietary information relating to our business operations. We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent financial reporting and unauthorized access to sensitive or confidential data, is either prevented or detected on a timely basis. Nevertheless, all technology systems remain vulnerable to unauthorized access and may be corrupted by cyber attacks, computer viruses or other malicious software code, the nature of which threats are constantly evolving and becoming increasingly sophisticated. In addition, authorized persons could inadvertently or intentionally release confidential or proprietary information. Although we take precautions to password protect and encrypt our mobile electronic hardware, if such hardware is stolen, misplaced or left unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions by us. Breach or other failure of our technology systems, including those of third parties with which we do business, or failure to timely and effectively identify and respond to any such breach or failure, could result in the loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by the incident, additional security costs to mitigate against future incidents and litigation costs resulting from the incident. In addition, our increased use of mobile and cloud technologies, including as a result of the shift to work-from-home arrangements as a result of the COVID-19 pandemic, has heightened these and other operational risks, and any failure by our mobile or cloud technology service providers to adequately safeguard the systems we use and prevent or quickly detect and remediate cyber attacks could disrupt our operations and result in misappropriation, corruption or loss of confidential or propriety information. Moreover, the loss of confidential customer identification information could harm our reputation, result in the termination of contracts by our existing customers and subject us to liability under state, federal and international laws that protect confidential personal data, resulting in increased costs, loss of revenues and substantial penalties. In 2018, the E.U. significantly increased the potential penalties for noncompliance with requirements for the handling and maintenance of personal and sensitive data concerning customers and employees. Our failure to comply with these requirements could result in penalties of up to four percent of our global revenues, regulatory action and reputational risk. The recently enacted California

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Consumer Privacy Act (CCPA), which took effect in January 2020, provides for enhanced consumer protections for California residents and statutory fines for data security breaches or other CCPA violations. Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber attacks, and may in the future result in heightened cyber security requirements, including additional regulatory expectations for oversight of vendors and service providers.

 

Risks Relating to the Regulation of Our Business

 

Legal and regulatory developments affecting the investment industry could increase our regulatory costs and/or reduce our revenues. Our business is subject to complex and extensive regulation by various regulatory authorities in jurisdictions around the world. This regulatory environment may be altered without notice by new laws or regulations, revisions to existing regulations or new interpretations or guidance. Global financial regulatory reform initiatives may result in more stringent regulation, and changes in laws or regulations and their application to us could have a material adverse impact on our business, our profitability and mode of operations. In recent years, regulators in both the United States and abroad have increased oversight of the financial sector of the economy. Some of the newly adopted and proposed regulations are focused directly on the investment management industry, while others apply more broadly, but affect our industry. It is uncertain how regulatory trends will be affected by current and future political developments.

 

Under a final rule and interpretive guidance issued by FSOC, certain non-bank financial institutions have been designated for the Federal Reserve’s supervision as SIFIs. Additional non-bank financial companies, which may include large asset management companies such as us, may be designated as SIFIs in the future. Currently, there are no non-bank financial companies with a SIFI designation. If we are designated a SIFI, we would be subject to enhanced prudential measures, which could include capital and liquidity requirements, leverage limits, enhanced public disclosures and risk management requirements, annual stress testing by the Federal Reserve, credit exposure and concentration limits, supervisory and other requirements that could, individually, or in the aggregate, adversely affect our business and operations.

 

EVM, Parametric and BMR are registered with the CFTC and the NFA as Commodity Pool Operators and Commodity Trading Advisors; other subsidiaries of the Company claim exemptions from registration. The CFTC generally allows operators of registered mutual funds that are subject to registration as Commodity Pool Operators to comply with SEC disclosure, reporting and recordkeeping rules as the means of complying with CFTC’s similar requirements. These CFTC rules do not, however, relieve registered Commodity Pool Operators from compliance with applicable anti-fraud provisions or certain performance reporting and recordkeeping requirements. The Company incurs ongoing costs associated with monitoring compliance with these requirements, including, but not limited to, CFTC and NFA registration and exemption obligations and the periodic reporting requirements of Commodity Pool Operators and Commodity Trading Advisors.

 

The regulation of derivatives markets has undergone substantial change in recent years and such change may continue. In particular, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and regulations promulgated thereunder require many derivatives to be cleared and traded on an exchange, expand entity registration requirements, impose business conduct requirements on counterparties and impose other regulatory requirements that will continue to change derivative markets as regulations are implemented. Additional regulation of the derivatives markets, including new Rule 18f-4 under the 1940 Act adopted in October 2020, may make the use of derivatives more costly, may limit the availability or reduce the liquidity of derivatives, and may impose limits or restrictions on the counterparties to derivative transactions.

 

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Certain of our subsidiaries are required to file quarterly reports on Form PF for private funds they manage, pursuant to systemic risk reporting requirements adopted by the SEC. These filings require significant investments in people and systems to ensure timely and accurate reporting. Further investment will be necessary as we implement rules adopted by the SEC in 2016 that amended Form ADV and established Form N-PORT to require additional reporting for the separate accounts and Registered Funds we manage, respectively.

 

In Europe, the revised Markets in Financial Instruments Directive (MiFID II Directive) and the Markets in Financial Instruments Regulation (MiFIR) (collectively, MiFID II) took effect in January 2018. Implementation of MiFID II significantly affects the structure and operation of the E.U. financial markets and our European operations. Some of the main changes introduced by MiFID II include: (1) enhancing business conduct and governance requirements; (2) broadening the scope of pre- and post-trade transparency; (3) enhancing disclosure requirements; (4) increasing transaction reporting requirements; (5) revising the relationship between client commissions and investment research services; and (6) further regulating trading revenue.

 

All of these new and developing laws and regulations have resulted in, and will likely continue to result in, greater compliance and administrative burdens on us, increasing our expenses.

 

We could be adversely affected by changes in tax laws. Changes in U.S. tax policy may affect us to a greater degree than many of our competitors because we manage significant assets in funds and separate accounts with an after-tax return objective. Future changes in tax laws, including as a result of changes proposed by the new incoming Presidential administration, or tax rulings could also materially affect our effective tax rate. In particular, the reduction in the corporate income tax rate resulting from the Tax Cuts and Jobs Act enacted into U.S. law in December 2017 (2017 Tax Act) could be reduced or rescinded by future tax law changes. While increasing our effective tax rate, an increase in future tax rates would also cause the carrying value of our deferred tax assets at the time of enactment to be increased.

 

Exposure to additional tax liabilities could have a material impact on our financial condition, results of operations and/or liquidity. We are subject to ongoing tax audits in various jurisdictions, including several states. We regularly assess the likely outcomes of these audits to determine the appropriateness of our tax provision. There can be no assurance that we will accurately predict the outcomes of these audits, which could have a material impact on our financial statements.

 

Our business is subject to risk from legal and regulatory proceedings. We are subject to federal securities laws, state laws regarding securities fraud, other federal and state laws and rules, and regulations of certain regulatory, self-regulatory and other organizations, including, among others, the SEC, FINRA, the CFTC, the NFA and the New York Stock Exchange. We are also subject to substantial legal and regulatory requirements in the U.K., E.U., Singapore, Japan and other jurisdictions in which we operate outside the U.S. While we have focused significant attention and resources on the development and implementation of compliance policies, procedures and practices, non-compliance with applicable laws, rules or regulations, either in the U.S. or abroad, or our inability to adapt to a complex and ever-changing regulatory environment could result in sanctions against us, which could adversely affect our reputation, business, revenue and earnings. From time to time, various claims or potential claims against us arise, including employment-related claims.

 

We carry insurance in amounts and under terms that we believe are appropriate. We cannot guarantee that our insurance will cover most liabilities and losses to which we may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As our insurance policies come up for renewal, we may need

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to assume higher deductibles or pay higher premiums, which would increase our expenses and reduce our net income.

 

Risks Relating to Owning Our Non-Voting Common Stock

 

Our Non-Voting Common Stock lacks voting rights. Our Non-Voting Common Stock has no voting rights under any circumstances. All voting power resides with our Voting Common Stock, all shares of which are held by officers of the Company and its subsidiaries. All the shares of our Voting Common Stock are deposited in a voting trust (Voting Trust) in exchange for Voting Trust Receipts that entitle the holder to receive the dividends paid on the Voting Common Stock he or she has deposited. As of October 31, 2020, there were 25 holders of Voting Trust Receipts representing Voting Common Stock, each holder of which is a Voting Trustee of the Voting Trust. Holders of Non-Voting Common Stock should understand that such ownership interests have no ability to vote in the election of the Company’s Board of Directors and no right to direct the Company’s management and strategy. On October 7, 2020, the Voting Trust approved and adopted the Merger Agreement under which Morgan Stanley has agreed to acquire the Company, subject to the satisfaction of closing conditions. The exclusion of our Non-Voting Common Stock from stock market indexes, whether as a result of our dual-class capitalization or any other reason, could have an adverse impact on the trading price of our Non-Voting Common Stock.

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 2. Properties

 

We conduct our principal operations through leased offices located in Boston, Massachusetts; Atlanta, Georgia; Minneapolis, Minnesota; New York, New York; Seattle, Washington; Washington, District of Columbia; Westport, Connecticut; West Palm Beach, Florida; Winter Park, Florida; London, England; Dublin, Ireland; Singapore; Sydney, Australia; and Tokyo, Japan. For more information, please see Note 9 of our Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K.

 

Item 3. Legal Proceedings

 

We are party to various legal proceedings that are incidental to our business. We believe these legal proceedings will not have a material effect on our consolidated financial condition, results of operations or cash flows.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

33


 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Price Range of Non-Voting Common Stock, Dividend History and Policy

 

Our Voting Common Stock, $0.00390625 par value, is not publicly traded, and was held as of October 31, 2020 by 25 Voting Trustees pursuant to the voting trust agreement described in Item 12 of this Annual Report on Form 10-K, which is incorporated herein by reference. Dividends on our Voting Common Stock are paid quarterly and are equal to the dividends paid on our Non-Voting Common Stock (see below).

 

Our Non-Voting Common Stock, $0.00390625 par value, is listed on the New York Stock Exchange under the symbol EV. The approximate number of registered holders of record of our Non-Voting Common Stock at October 31, 2020 was 686.

 

On October 15, 2020, the Company declared a quarterly dividend of $0.375 per share on its common stock. We currently expect to declare and pay quarterly dividends on our Voting and Non-Voting Common Stock that are comparable to those declared in the fourth quarter of fiscal 2020.

 

On October 8, 2020, Eaton Vance and Morgan Stanley announced that they had entered into a definitive agreement for Morgan Stanley to acquire Eaton Vance. Under the terms of the merger agreement, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 shares of Morgan Stanley Common Stock per share of Eaton Vance Common Stock held. The merger agreement contains an election procedure whereby each Eaton Vance shareholder may elect to receive the merger consideration all in cash or all in stock, subject to proration and adjustment.

 

The merger agreement also provided for Eaton Vance shareholders to receive a special cash dividend of $4.25 per share of Eaton Vance Common Stock held. On November 23, 2020, the Eaton Vance Board of Directors declared the $4.25 per share dividend, which was paid on December 18, 2020 to shareholders of record on December 4, 2020.

 

The proposed transaction is subject to customary closing conditions and is expected to close in the second quarter of 2021.

 

Performance Graph

 

The following graph compares the cumulative total shareholder return on our Non-Voting Common Stock for the period from November 1, 2015 through October 31, 2020 to that of the cumulative total return of the S&P 500® Index and the SNL U.S. Asset Manager Index(1) over the same period. The S&P 500 is a broad-based index of 500 of the largest U.S. public stocks. The SNL U.S. Asset Manager Index is a composite of 40 U.S. publicly traded asset management company stocks. The comparison assumes $100 was invested on October 31, 2015 in our Non-Voting Common Stock and the compared indexes at the closing price on that day, and the reinvestment of all dividends paid over the period.

________________________________________________________

(1)As of October 31, 2020, the SNL U.S. Asset Manager Index included: Affiliated Managers Group Inc.; AllianceBernstein Holding L.P.; Ameriprise Financial Inc.; Apollo Global Management, Inc.; Ares Management Corporation; Artisan Partners Asset Management Inc.; Ashford Inc.; Associated Capital Group, Inc.; BlackRock Inc.; Blackstone Group Inc.; BrightSphere Investment Group Inc.; Carlyle Group L.P.; Cohen & Steers, Inc.; Diamond Hill Investment Group Inc.; Eaton Vance Corp.; Federated Hermes Inc.; Fifth Street Asset Management Inc.; Franklin Resources Inc.; Gabelli Equity Trust Inc.; GAMCO Investors, Inc.; Great Elm Capital Group, Inc.; Hamilton Lane Inc.; Hennessy Advisors Inc.; Invesco Ltd.; Janus Henderson Group Plc.; KKR & Co. Inc.; Manning & Napier, Inc.; Medley Management Inc.; Pzena Investment Management, Inc.; Safeguard Scientifics Inc.; Sculptor Capital Management, Inc.; SEI Investments Co.; Silvercrest Asset Management Group Inc.; T. Rowe Price Group Inc.; U.S. Global Investors Inc.; Victory Capital Holdings, Inc.; Virtus Investment Partners, Inc.; Waddell & Reed Financial Inc.; Westwood Holdings Group Inc.; WisdomTree Investments, Inc.

34


 

 

Comparison of Five-Year Cumulative Total Shareholder Return

 

Picture 1 

35


 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

The table below sets forth information regarding purchases by the Company of our Non-Voting Common Stock on a monthly basis during the fourth quarter of fiscal 2020:

 

 

 

 

 

(c)

(d)

 

(a)

 

 

Total Number of

Maximum Number

 

Total

 

(b)

Shares Purchased

of Shares That May

 

Number of

 

Average

as Part of Publicly

Yet Be Purchased

 

Shares

 

Price Paid

Announced Plans

Under the Plans

Period

Purchased(1)

 

Per Share

or Programs(2)

or Programs

August 1, 2020 through

 

 

 

 

 

August 31, 2020

2,600

$

41.43

2,600

3,953,936

September 1, 2020 through

 

 

 

 

 

September 30, 2020

117

$

36.83

117

3,953,819

October 1, 2020 through

 

 

 

 

 

October 31, 2020

1,771,426

$

40.94

1,771,426

2,182,393

Total

1,774,143

$

40.94

1,774,143

2,182,393

 

 

 

 

 

 

(1) Represents shares of Non-Voting Common Stock repurchased to meet withholding tax obligations upon the vesting of restricted share awards.

(2) We announced a share repurchase program on July 10, 2019, which authorized the repurchase of up to 8,000,000 shares of our Non-Voting Common Stock in the open market and in private transactions in accordance with applicable securities laws. This repurchase program is not subject to an expiration date; however, purchases of common stock are prohibited by the Merger Agreement with Morgan Stanley while the merger is pending. As indicated in footnote (1), the 1,774,143 shares repurchased during the fourth quarter of fiscal 2020 represent shares of Non-Voting Common Stock repurchased to meet withholding tax obligations upon the vesting of restricted share awards. Such repurchases are counted against the number of shares authorized under our share repurchase program.

 

36


 

Item 6. Selected Financial Data

 

The following table contains selected financial data for the last five years. This data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and our Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

 

Financial Highlights

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended October 31,

(in thousands, except per share data)

 

2020

 

2019

 

2018

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Total revenue(1)

$

1,730,365

$

1,683,252

$

1,692,422

$

1,532,111

$

1,337,067

Operating Income

 

374,240

 

520,871

 

555,202

 

482,758

 

414,268

Adjusted operating income(2)

 

538,879

 

531,767

 

559,967

 

488,352

 

418,032

Net income

 

133,334

 

432,876

 

397,905

 

306,373

 

264,757

Net income attributable to non-controlling

 

 

 

 

 

 

 

 

 

 

and other beneficial interests(3)

 

(5,182)

 

(32,841)

 

(15,967)

 

(24,242)

 

(23,450)

Net income attributable to Eaton Vance

 

 

 

 

 

 

 

 

 

 

Corp. shareholders

 

138,516

 

400,035

 

381,938

 

282,131

 

241,307

Adjusted net income attributable to Eaton

 

 

 

 

 

 

 

 

 

 

Vance Corp. shareholders(2)

 

380,904

 

379,845

 

391,372

 

284,018

 

240,021

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Total assets(4)(5)

$

4,949,298

$

4,253,629

$

3,599,328

$

2,330,901

$

1,730,382

Debt(5)(6)

 

621,348

 

620,513

 

619,678

 

618,843

 

571,773

Redeemable non-controlling

 

 

 

 

 

 

 

 

 

 

interests (temporary equity)

 

222,854

 

285,915

 

335,097

 

250,823

 

109,028

Total Eaton Vance Corp.

 

 

 

 

 

 

 

 

 

 

shareholders' equity

 

1,323,685

 

1,184,119

 

1,107,431

 

1,011,396

 

703,789

Non-redeemable non-controlling

 

 

 

 

 

 

 

 

 

 

interests

 

-

 

-

 

1,000

 

864

 

786

Total permanent equity

 

1,323,685

 

1,184,119

 

1,108,431

 

1,012,260

 

704,575

 

 

 

 

 

 

 

 

 

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Basic

$

1.26

$

3.63

$

3.33

$

2.54

$

2.20

Diluted

 

1.20

 

3.50

 

3.11

 

2.42

 

2.12

Adjusted diluted(3)

 

3.29

 

3.32

 

3.18

 

2.44

 

2.11

Cash dividends declared

 

1.500

 

1.425

 

1.280

 

1.150

 

1.075

 

37


 

(1) Prior year revenue amounts have been restated to reflect the Company’s full retrospective adoption of Accounting Standard Update (ASU) 2014-09 on November 1, 2018.

(2) Although the Company reports its financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP), management believes that certain non-U.S. GAAP financial measures, specifically, adjusted operating income, adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, while not a substitute for U.S. GAAP financial measures, may be effective indicators of our performance over time. Non-U.S. GAAP financial measures should not be construed to be superior to U.S. GAAP measures. In calculating these non-U.S. GAAP financial measures, operating income, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share are adjusted to exclude items management deems non-operating or non-recurring in nature, or otherwise outside the ordinary course of business. These adjustments may include, when applicable, the add back of closed-end fund structuring fees, costs associated with debt repayments and tax settlements, the tax impact of stock-based compensation shortfalls or windfalls, impairment charges, costs in connection with the proposed acquisition of Eaton Vance by Morgan Stanley and other acquisition-related items, and non-recurring charges for the effect of tax law changes. Adjustments to operating income also include the add-back of management fee revenue received from consolidated sponsored funds and consolidated collateralized loan obligation (CLO) entities (collectively, consolidated investment entities) that are eliminated in consolidation and the non-management expenses of consolidated sponsored funds recognized in consolidation. Adjustments to net income attributable to Eaton Vance Corp. shareholders include the after-tax impact of these adjustments to operating income and the elimination of gains (losses) and other investment income (expense) of consolidated investment entities and other seed capital investments included in non-operating income (expense), as determined net of tax and non-controlling and other beneficial interests. Management and our Board of Directors, as well as certain of our outside investors, consider these adjusted numbers a measure of our underlying operating performance. Management believes adjusted operating income, adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and may provide a useful baseline for analyzing trends in our underlying business. Our use of these adjusted numbers, including reconciliations of operating income to adjusted operating income, net income attributable to Eaton Vance Corp. shareholders to adjusted net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share to adjusted earnings per diluted share, is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Annual Report on Form 10‐K.

(3) Net income attributable to non-controlling and other beneficial interests reflects an increase of $0.5 million and $0.2 million in the estimated redemption value of non-controlling interests in our affiliates redeemable at other than fair value in fiscal 2017 and 2016, respectively. There were no holders of non-controlling interests in our affiliates redeemable at other than fair value in fiscal 2020, 2019 or 2018. Net income attributable to non-controlling and other beneficial interests also includes net income of $9.8 million in fiscal 2016 attributable to other beneficial interest holders of consolidated CLO entities. The net income of consolidated CLO entities in fiscal 2020, 2019, 2018 and 2017 was entirely attributable to the Company as a result of the Company’s application of the measurement alternative to Accounting Standard Codification (ASC) 820 for collateralized financing entities.

(4) Total assets on October 31, 2020, 2019, 2018 and 2017 include $2.2 billion, $1.8 billion, $1.1 billion and $31.3 million of assets held by consolidated CLO entities, respectively. The Company did not consolidate any CLO entities as of October 31, 2016.

(5) In fiscal 2017, the Company adopted ASU 2015-03, which requires certain debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. Total assets and debt were each reduced by $2.2 million as of October 31, 2016 to reflect the reclassification of debt issuance costs from other assets to debt.

(6) In fiscal 2017, the Company issued $300 million of 3.5 percent Senior Notes due April 2027 and used the net proceeds from the issuance in part to retire the remaining $250 million aggregate principal amount of its 6.5 percent Senior Notes due October 2017. The Company recognized a loss on extinguishment of debt totaling $5.4 million in conjunction with the retirement in fiscal 2017.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Overview

 

Eaton Vance Corp. provides advanced investment strategies and wealth management solutions to forward-thinking investors around the world. Our principal business is managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. Our core strategy is to develop and sustain management expertise across a range of investment disciplines and to offer leading investment strategies and services through multiple distribution channels. In executing our core strategy, we have developed broadly diversified investment management capabilities and a highly functional marketing, distribution and customer service organization. We measure our success as a Company based principally on investment performance delivered, client satisfaction, reputation in the marketplace, progress achieving strategic objectives, employee development and satisfaction, business and financial results, and shareholder value created.

 

38


 

We conduct our investment management and advisory business through wholly- and majority-owned investment affiliates, which include: Eaton Vance Management (EVM), Parametric Portfolio Associates LLC (Parametric), Atlanta Capital Management Company, LLC (Atlanta Capital) and Calvert Research and Management (Calvert). We also offer investment management advisory services through minority-owned affiliate Hexavest Inc. (Hexavest).

 

Through EVM, Atlanta Capital, Calvert and our other affiliates, we manage active equity, income, alternative and blended strategies across a range of investment styles and asset classes, including U.S., global and international equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds, and mortgage-backed securities. Through Parametric, we manage a range of systematic investment strategies, including systematic equity, systematic fixed income, systematic alternatives and managed options strategies. Through Parametric, we also provide portfolio overlay services and manage custom separate account portfolios, including Custom Core™ equity, Custom Core™ fixed income, laddered fixed income, multi-asset and multi-manager portfolios. We also oversee the management of, and distribute, investment funds sub-advised by unaffiliated third-party managers, including global, emerging market and regional equity and asset allocation strategies.

 

Our breadth of investment management capabilities supports a wide range of strategies and services offered to fund shareholders and separate account investors. Our equity strategies encompass a diversity of investment objectives, risk profiles, income levels and geographic representation. Our income investment strategies cover a broad duration, geographic representation and credit-quality range and encompass both taxable and tax-free investments. We also offer alternative investment strategies that include global macro absolute return and commodity-based investments. Although we manage and distribute a wide range of investment strategies and services, we operate in one business segment, namely as an investment adviser to funds and separate accounts. As of October 31, 2020, we had $515.7 billion in consolidated assets under management.

 

We distribute our funds and individual separately managed accounts principally through financial intermediaries. We have broad market reach, with distribution partners including national and regional broker-dealers, independent broker-dealers, registered investment advisors, banks and insurance companies. We support these distribution partners with a team of approximately 160 sales professionals covering U.S. and international markets.

 

We employ approximately 30 sales professionals focused on serving institutional and high-net-worth clients who access investment management services on a direct basis and through investment consultants. Through our wholly- and majority-owned affiliates, we manage investments for a broad range of clients in the institutional and high-net-worth marketplace in the U.S. and internationally, including corporations, sovereign wealth funds, endowments, foundations, family offices and public and private employee retirement plans.

 

Our revenue is derived primarily from management, distribution and service fees received from Eaton Vance-, Parametric- and Calvert-branded funds and management fees received from individual and institutional separate accounts. Our fee revenues are based primarily on the value of the investment portfolios we manage, and fluctuate with changes in the total value and mix of assets under management. As a matter of course, investors in our sponsored open-end funds and separate accounts have the ability to redeem their investments at any time, without prior notice, and there are no material restrictions that would prevent them from doing so. Our major expenses are employee compensation, distribution-related expenses, service fee expense, fund-related expenses, facilities expense and information technology expense.

 

39


 

Our discussion and analysis of our financial condition, results of operations and cash flows is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to goodwill and intangible assets, temporary equity, income taxes, investments and stock-based compensation. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under current circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

 

Our discussion and analysis of fiscal 2020 compared to fiscal 2019 is included herein. For discussion and analysis of fiscal 2019 compared to fiscal 2018, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, which was filed with the SEC on December 20, 2019.

 

Proposed Acquisition of Eaton Vance by Morgan Stanley

 

On October 8, 2020, Eaton Vance and Morgan Stanley announced that they had entered into a definitive agreement for Morgan Stanley to acquire Eaton Vance. Under the terms of the merger agreement, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 shares of Morgan Stanley Common Stock per share of Eaton Vance Common Stock held. The merger agreement contains an election procedure whereby each Eaton Vance shareholder may elect to receive the merger consideration all in cash or all in stock, subject to proration and adjustment.

 

The merger agreement also provided for Eaton Vance shareholders to receive a special cash dividend of $4.25 per share of Eaton Vance Common Stock held. On November 23, 2020, the Eaton Vance Board of Directors declared the $4.25 per share dividend, which was paid on December 18, 2020 to shareholders of record on December 4, 2020.

 

The proposed transaction is subject to customary closing conditions and expected to close in the second quarter of 2021.

 

40


 

COVID-19 Pandemic

 

The ongoing COVID-19 pandemic has caused significant disruption in global financial markets and adversely affected our business. During the second quarter of fiscal 2020, we experienced a decline in our assets under management, revenue and earnings due to market price declines and net outflows driven by investor uncertainty related to the pandemic. While financial markets and our flow trends have since substantially recovered, the COVID-19 pandemic continues to significantly affect the manner in which we operate our business. Over 95 percent of our employees are currently working remotely, with only a small number in the office each business day. Employees have adapted well to the remote work environment, and we have not experienced any significant disruptions during the pandemic period due to operational issues, loss of communication capabilities, technology failure or cyber attacks. While the Company is continuously monitoring and evaluating the impact of COVID-19 on our business, the extent to which COVID-19 affects our business, results of operations and financial condition will depend on future developments that are highly uncertain. See Item 1A Risk Factors herein for information on the possible future effects of the COVID-19 pandemic on our results.

 

Current Developments

 

Please see Current Developments under Business in Item 1 of this Annual Report on Form 10-K for a summary of current developments in our business.

 

Performance

 

As of October 31, 2020, 70 Calvert, Eaton Vance and Parametric-branded mutual funds offered in the U.S. were rated 4 or 5 stars by MorningstarTM for at least one class of shares, including 32 five star-rated funds. As measured by total return net of expenses at fiscal year-end, 18 percent of our U.S. mutual fund assets were in fund share classes whose performance ranked in the top quartile of their Morningstar peer groups over three years, 46 percent in the top quartile over five years and 55 percent in the top quartile over ten years. In the annual Barron’s/Lipper rankings of Best Mutual Fund Families for calendar 2019, Calvert, Eaton Vance and Parametric collectively ranked 33rd overall among 55 fund families rated for one-year performance, 8th among 52 fund families based on five-year returns and 28th among 45 families for ten-year performance. A good source of performance-related information for our funds is their websites, available at www.calvert.com and www.eatonvance.com. Information on these websites is not incorporated by reference into this Annual Report on Form 10-K. On our funds’ websites, investors can also obtain other current information about our funds, including investment objective and principal investment policies, portfolio characteristics, expenses and Morningstar ratings.

 

Consolidated Assets under Management

 

Prevailing equity and income market conditions and investor sentiment affect the sales and redemptions of our investment offerings, managed asset levels, operating results and the recoverability of our investments. During fiscal 2020, the S&P 500 Index, a broad measure of U.S. equity market performance, had total returns of 9.7 percent and the MSCI Emerging Market Index, a broad measure of emerging market equity performance, had total returns of 8.6 percent. Over the same period, the Barclays U.S. Aggregate Bond Index, a broad measure of U.S. bond market performance, had total returns of 6.2 percent.

 

Consolidated assets under management were $515.7 billion on October 31, 2020, up 4 percent, from $497.4 billion of consolidated assets under management on October 31, 2019. The year-over-year increase reflects

41


 

annual net inflows of $4.7 billion, market price appreciation of $11.3 billion and $2.3 billion of new managed assets gained in the acquisition of the business assets of WaterOak Advisors, LLC (WaterOak) on October 16, 2020. Average consolidated assets under management increased 8 percent to $497.8 billion in fiscal 2020 from $462.8 billion in fiscal 2019.

 

The following tables summarize our consolidated assets under management by investment mandate, investment vehicle and investment affiliate.

 

Consolidated Assets under Management by Investment Mandate(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31,

2020

2019

 

 

 

 

% of

 

 

% of

 

 

% of

vs.

vs.

(in millions)

 

2020

Total

 

2019

Total

 

2018

Total

2019

2018

Equity(2)

$

135,174

26%

$

131,895

27%

$

115,772

26%

2%

14%

Fixed income(3)

 

73,271

14%

 

62,378

13%

 

54,339

12%

17%

15%

Floating-rate income

 

28,960

6%

 

35,103

7%

 

44,837

10%

-17%

-22%

Alternative(4)

 

7,424

1%

 

8,372

2%

 

12,139

3%

-11%

-31%

Parametric custom portfolios(5)

 

176,435

34%

 

164,895

32%

 

134,345

31%

7%

23%

Parametric overlay services

 

94,473

19%

 

94,789

19%

 

77,871

18%

0%

22%

Total

$

515,737

100%

$

497,432

100%

$

439,303

100%

4%

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Consolidated Eaton Vance Corp. See table on page 49 for directly managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above.

(2)

Includes balanced and other multi-asset mandates. Excludes equity mandates reported as Parametric custom portfolios.

(3)

Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.

(4)

Consists of absolute return and commodity mandates.

(5)

Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.

 

Equity assets under management included $48.5 billion, $45.4 billion and $40.7 billion of assets managed for after-tax returns on October 31, 2020, 2019 and 2018, respectively. Parametric custom portfolio assets under management included $138.5 billion, $124.1 billion and $98.6 billion of assets managed for after-tax returns and/or tax-exempt income on October 31, 2020, 2019 and 2018, respectively. Fixed income assets included $29.9 billion, $27.9 billion and $25.4 billion of tax-exempt municipal income assets on October 31, 2020, 2019 and 2018, respectively.

 

42


 

Consolidated Assets under Management by Investment Vehicle(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31,

2020

2019

 

 

 

 

% of

 

 

% of

 

 

% of

vs.

vs.

(in millions)

 

2020

Total