Eaton Vance Emerging Markets Debt Opportunities Fund. Annual Report July 31, 2017

Transcription

1 Emerging Markets Debt Opportunities Fund Annual Report

2 Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission ( CFTC ) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund is considered to be a commodity pool operator under CFTC regulations. The Fund s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor. The CFTC has neither reviewed nor approved the Fund s investment strategies. Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested. This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call

3 Annual Report Eaton Vance Table of Contents Management s Discussion of Fund Performance 2 Performance 3 Fund Profile 4 Endnotes and Additional Disclosures 5 Fund Expenses 6 Financial Statements 7 Report of Independent Registered Public Accounting Firm 30 Federal Tax Information 31 Board of Trustees Contract Approval 32 Management and Organization 35 Important Notices 38

4 Management s Discussion of Fund Performance 1 Economic and Market Conditions Debt markets in emerging countries generated widespread gains for the 12-month period ended. Factors contributing to the positive returns included continued low bond yields in developed markets, a broadly weaker U.S. dollar and a backdrop of improving global growth accompanied by subdued inflation. After rising in the first two months of the period, emerging debt markets retreated in October and November. The sell-off was triggered by anticipation of the U.S. presidential election and, subsequently, worries that the new administration s policies would lead to higher inflation, tighter U.S. dollar liquidity and slower global trade. Falling oil prices further dampened investor sentiment. Emerging debt markets regained their footing in December and continued to advance throughout the remainder of the period. While the Federal Reserve raised interest rates three times, other major central banks remained highly accommodative, containing yields in developed markets and fueling demand for emerging market debt. Political gridlock in Washington D.C. stalled progress on the new administration s policy agenda, which pushed the U.S. dollar and inflation expectations lower. Additionally, measures of actual inflation softened across developed and emerging countries, in part due to the decline in oil prices that occurred from March through June. Nonetheless, oil prices rose for the full 12-month period and, overall, commodity prices were relatively stable. On the economic front, Chinese growth strengthened during the first six months of 2017, the eurozone economy reported its fastest growth since the region s debt crisis, and Russia and Brazil emerged from recession. Fund Performance For the 12-month period ended, Eaton Vance Emerging Markets Debt Opportunities Fund (the Fund) had a total return of 9.18% for Class A shares at net asset value (NAV), outperforming its primary benchmark, the JPMorgan Government Bond Index: Emerging Market (JPM GBI-EM) Global Diversified 2 (the Primary Benchmark), which returned 7.97% for the same period. This positive relative result was largely due to strongly performing off-benchmark positions in Central and Eastern Europe. is more representative of the Fund s investment strategy and holdings than its Primary Benchmark. Investments in the Central and Eastern Europe region drove the Fund s outperformance versus the Blended Benchmark, led by positioning in Turkey. Early in the period, an underweight in local Turkish sovereign debt was helpful, as a major ratings agency downgraded the country s credit rating, driving the currency lower and interest rates higher. Later in the period, overweights in local and external Turkish sovereign debt were advantageous as expectations that President Erdogan s victory in a constitutional referendum would stabilize the political environment prompted a broad rally in asset prices. An off-benchmark allocation to local Serbian sovereign debt also boosted relative results amid sustained improvement in the country s fiscal position and the election of a new president who campaigned as a pro-european Union reformer. Sub-Saharan Africa and Asia made meaningful contributions to Fund performance relative to the Blended Benchmark. Copper prices rose substantially during the 12 months, benefiting overweight positions in the local and U.S. dollar-denominated sovereign debt of Zambia, Africa s second-largest copper producer. In Asia, an off-benchmark holding in local Sri Lankan sovereign debt was a source of relative strength as inflation and credit growth eased in the country. The Middle East North Africa region did not have a significant impact on the Fund s performance versus the Blended Benchmark, while Latin America dampened relative results. Exposure to local Mexican sovereign debt was a key detractor due to the negative effects of an overweight early in the period, when investors grew concerned about anti-trade rhetoric from newly elected U.S. President Trump, and an underweight later in the period, when the administration softened its protectionist tone. An underweight in local Brazilian sovereign debt was also unfavorable, as the combination of a sluggish economic recovery and low inflation prompted Brazil s central bank to cut interest rates. The Fund also outperformed the 6.78% return of its blended secondary benchmark consisting of 50% JPMorgan Government Bond Index: Emerging Market (JPM GBI-EM) Global Diversified, 25% JPMorgan Emerging Market Bond Index (EMBI) Global Diversified and 25% JPMorgan Corporate Emerging Markets Bond Index (CEMBI) Broad Diversified (the Blended Benchmark). The Blended Benchmark See Endnotes and Additional Disclosures in this report. Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com. 2

5 Performance 2,3 Portfolio Managers John R. Baur, Michael A. Cirami, CFA, and Eric A. Stein, CFA % Average Annual Total Returns Class Performance Inception Date Inception Date One Year Five Years Since Inception Class A at NAV 09/03/ /04/ % 2.62% Class A with 4.75% Maximum Sales Charge Class I at NAV 09/03/ /04/ Class R6 at NAV 02/04/ /04/ JPMorgan Government Bond Index: Emerging Market (JPM GBI-EM) Global Diversified 7.97% 0.70% 2.44% Blended Index % Total Annual Operating Expense Ratios 4 Class A Class I Class R6 Gross 1.64% 1.39% 1.34% Net Growth of $10,000 3 This graph shows the change in value of a hypothetical investment of $10,000 in Class A of the Fund for the period indicated. For comparison, the same investment is shown in the indicated index. $12,000 $10,000 $11,232 $10,697 $8,950 Class A at NAV Class A with Maximum Sales Charge JPMorgan Government Bond Index: Emerging Market (JPM GBI-EM) Global Diversified $8,000 $6,000 2/4/13 7/13 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 Growth of Investment 3 Amount Invested Period Beginning At NAV With Maximum Sales Charge Class I $250,000 02/04/2013 $282,980 N.A. Class R6 $1,000,000 02/04/2013 $1,129,278 N.A. See Endnotes and Additional Disclosures in this report. Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com. 3

6 Fund Profile Asset Allocation (% of net assets) 5 Foreign Currency Exposure (% of net assets) 6 Foreign Government Debt Short-Term Investments Foreign Corporate Bonds Sovereign Loans Other Net Assets 79.1% Dominican Republic 9.1% Sri Lanka 9.0 Serbia 7.1 Indonesia 6.2 Egypt 5.1 Turkey 5.0 Georgia 5.0 India 4.2 Kazakhstan 3.7 Peru 3.4 Argentina 3.0 Colombia 2.8 Uganda 2.8 Other 1.9* Euro 7.0 Total Long 68.3 Total Short 7.0 Total Net 61.3 * Includes amounts each less than 1.0% or 1.0%, as applicable. See Endnotes and Additional Disclosures in this report. 4

7 Endnotes and Additional Disclosures 1 The views expressed in this report are those of the portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance and the Fund(s) disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as forward looking statements. The Fund s actual future results may differ significantly from those stated in any forward looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund s filings with the Securities and Exchange Commission. 2 JPMorgan Government Bond Index: Emerging Market (JPM GBI- EM) Global Diversified is an unmanaged index of local-currency bonds with maturities of more than one year issued by emerging markets governments. JPMorgan Emerging Market Bond Index (EMBI) Global Diversified is a market-cap weighted index that measures USD-denominated Brady Bonds, Eurobonds, and traded loans issued by sovereign entities. JPMorgan Corporate Emerging Markets Bond Index (CEMBI) Broad Diversified is an unmanaged index of USD-denominated emerging market corporate bonds. The Blended Index consists of 50% JPMorgan Government Bond Index: Emerging Market (JPM GBI-EM) Global Diversified, 25% JPMorgan Emerging Market Bond Index (EMBI) Global Diversified and 25% JPMorgan Corporate Emerging Markets Bond Index (CEMBI) Broad Diversified. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class A and Class I is linked to Class R6. Performance since inception for an index, if presented, is the performance since the Fund s or oldest share class inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. 4 Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 11/30/17. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. 5 Other Net Assets represents other assets less liabilities and includes any investment type that represents less than 1% of net assets. 6 Currency exposures include all foreign exchange denominated assets, currency derivatives and commodities (including commodity derivatives). Total exposures may exceed 100% due to implicit leverage created by derivatives. Fund profile subject to change due to active management. 3 Total Returns at net asset value (NAV) do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. 5

8 Fund Expenses Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2017 ). Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Beginning Account Value (2/1/17) Ending Account Value (7/31/17) Expenses Paid During Period* (2/1/17 7/31/17) Annualized Expense Ratio Actual Class A $1, $1, $5.95** 1.16% Class I $1, $1, $4.67** 0.91% Class R6 $1, $1, $4.42** 0.86% Hypothetical (5% return per year before expenses) Class A $1, $1, $5.81** 1.16% Class I $1, $1, $4.56** 0.91% Class R6 $1, $1, $4.31** 0.86% * Expenses are equal to the Fund s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on January 31, ** Absent an allocation of certain expenses to an affiliate, expenses would be higher. 6

9 Portfolio of Investments Foreign Government Bonds 73.4% Security Principal Amount (000 s omitted) Value Security El Salvador 6.5% Principal Amount (000 s omitted) Value Albania 0.8% Albania Government Bond, 8.90%, 7/24/25 ALL 52,000 $ 532,632 Albania Government Bond, 8.93%, 4/23/25 ALL 4,735 48,557 Total Albania $ 581,189 Barbados 2.3% Barbados Government International Bond, 6.625%, 12/5/35 (1) USD 617 $ 499,770 Barbados Government International Bond, 6.625%, 12/5/35 (2) USD ,330 Barbados Government International Bond, 7.00%, 8/4/22 (1) USD ,650 Barbados Government International Bond, 7.25%, 12/15/21 (1) USD ,830 Total Barbados $ 1,640,580 Belarus 2.1% Republic of Belarus, 6.875%, 2/28/23 (1) USD 660 $ 702,999 Republic of Belarus, 7.625%, 6/29/27 (1) USD ,571 Total Belarus $ 1,519,570 Bosnia and Herzegovina 0.6% Republic of Srpska, 1.50%, 10/30/23 BAM 340 $ 191,461 Republic of Srpska, 1.50%, 6/9/25 BAM 78 41,306 Republic of Srpska, 1.50%, 9/25/26 BAM ,703 Total Bosnia and Herzegovina $ 456,470 Dominican Republic 9.1% Dominican Republic, 10.40%, 5/10/19 (1) DOP 151,200 $ 3,219,975 Dominican Republic, 15.00%, 4/5/19 (1) DOP 70,000 1,603,534 Dominican Republic, 16.00%, 7/10/20 (1) DOP 71,100 1,730,903 Total Dominican Republic $ 6,554,412 Ecuador 2.0% Republic of Ecuador, 10.50%, 3/24/20 (2) USD 1,335 $ 1,421,775 Total Ecuador $ 1,421,775 Republic of El Salvador, 5.875%, 1/30/25 (1) USD 32 $ 29,080 Republic of El Salvador, 6.375%, 1/18/27 (1) USD 2,094 1,905,540 Republic of El Salvador, 7.375%, 12/1/19 (1) USD 1,900 1,926,125 Republic of El Salvador, 7.65%, 6/15/35 (1) USD ,915 Republic of El Salvador, 7.75%, 1/24/23 (1) USD 61 62,144 Republic of El Salvador, 8.25%, 4/10/32 (1) USD ,847 Republic of El Salvador, 8.625%, 2/28/29 (1) USD ,188 Total El Salvador $ 4,738,839 Ethiopia 0.4% Federal Democratic Republic of Ethiopia, 6.625%, 12/11/24 (1) USD 270 $ 272,689 Total Ethiopia $ 272,689 Fiji 3.7% Republic of Fiji, 6.625%, 10/2/20 (1) USD 2,649 $ 2,656,409 Total Fiji $ 2,656,409 Georgia 3.9% Georgia Treasury Bond, 6.75%, 10/6/18 GEL 75 $ 31,059 Georgia Treasury Bond, 8.00%, 6/9/18 GEL ,632 Georgia Treasury Bond, 10.50%, 2/5/25 GEL ,214 Georgia Treasury Bond, 11.75%, 4/28/21 GEL 1, ,964 Georgia Treasury Bond, %, 3/10/18 GEL 1, ,857 Georgia Treasury Bond, %, 7/16/20 GEL 1, ,834 Total Georgia $ 2,802,560 India 4.0% India Government Bond, 7.88%, 3/19/30 INR 88,000 $ 1,472,239 India Government Bond, 7.95%, 8/28/32 INR 86,000 1,453,003 Total India $ 2,925,242 Indonesia 4.8% Indonesia Government Bond, 8.25%, 5/15/36 IDR 1,482,000 $ 118,152 Indonesia Government Bond, 8.75%, 5/15/31 IDR 40,094,000 3,358,218 Total Indonesia $ 3,476,370 7 See Notes to Financial Statements.

10 Portfolio of Investments continued Security Principal Amount (000 s omitted) Value Security Principal Amount (000 s omitted) Value Macedonia 4.0% Thailand 2.0% Republic of Macedonia, 4.875%, 12/1/20 (2) EUR 730 $ 931,475 Republic of Macedonia, 4.875%, 12/1/20 (1) EUR ,599 Republic of Macedonia, 5.625%, 7/26/23 (1) EUR 1,430 1,849,444 Total Macedonia $ 2,908,518 Thailand Government Bond, 1.25%, 3/12/28 (1)(3) THB 51,268 $ 1,449,953 Total Thailand $ 1,449,953 Total Foreign Government Bonds (identified cost $51,801,254) $53,132,309 Peru 3.4% Peru Government Bond, 6.35%, 8/12/28 PEN 1,058 $ 346,960 Peru Government Bond, 8.20%, 8/12/26 PEN 5,778 2,142,747 Total Peru $ 2,489,707 Foreign Corporate Bonds 5.0% Security Principal Amount (000 s omitted) Value Serbia 8.9% Serbia Treasury Bond, 5.75%, 7/21/23 RSD 218,830 $ 2,205,143 Serbia Treasury Bond, 10.00%, 3/20/21 RSD 184,850 2,114,618 Serbia Treasury Bond, 10.00%, 2/5/22 RSD 178,340 2,098,277 Total Serbia $ 6,418,038 Seychelles 0.4% Republic of Seychelles, 7.00% to 1/1/18, 1/1/26 (1)(11) USD 302 $ 313,530 Total Seychelles $ 313,530 Sri Lanka 9.0% Sri Lanka Government Bond, 8.50%, 5/1/19 LKR 57,000 $ 360,215 Sri Lanka Government Bond, 10.00%, 10/1/22 LKR 61, ,269 Sri Lanka Government Bond, 10.25%, 3/15/25 LKR 116, ,750 Sri Lanka Government Bond, 10.60%, 9/15/19 LKR 59, ,984 Sri Lanka Government Bond, 10.75%, 3/1/21 LKR 22, ,351 Sri Lanka Government Bond, 11.00%, 8/1/21 LKR 11,000 72,055 Sri Lanka Government Bond, 11.00%, 8/1/24 LKR 79, ,773 Sri Lanka Government Bond, 11.00%, 6/1/26 LKR 137, ,072 Sri Lanka Government Bond, 11.00%, 5/15/30 LKR 53, ,601 Sri Lanka Government Bond, 11.40%, 1/1/24 LKR 66, ,788 Sri Lanka Government Bond, 11.50%, 12/15/21 LKR 69, ,263 Sri Lanka Government Bond, 11.50%, 8/1/26 LKR 57, ,354 Sri Lanka Government Bond, 11.50%, 9/1/28 LKR 210,420 1,403,063 Total Sri Lanka $ 6,511,538 Suriname 5.5% Republic of Suriname, 9.25%, 10/26/26 (1) USD 3,888 $ 3,994,920 Total Suriname $ 3,994,920 Argentina 2.6% Banco Hipotecario SA, %, 1/12/20 (1)(4) ARS 15,180 $ 856,376 YPF SA, %, 7/7/20 (1)(4) USD 990 1,006,997 Total Argentina $ 1,863,373 Azerbaijan 0.1% International Bank of Azerbaijan OJSC Via Rubrika Finance Co., Ltd., 6.17%, 5/10/17 (1)(5) USD 200 $ 87,262 Total Azerbaijan $ 87,262 Brazil 0.6% Petrobras Global Finance BV, 6.25%, 3/17/24 USD 396 $ 413,820 Total Brazil $ 413,820 Georgia 0.9% Bank of Georgia JSC, 11.00%, 6/1/18 GEL 640 $ 269,468 Bank of Georgia JSC, 11.00%, 6/1/20 (1) GEL ,221 Georgian Oil and Gas Corp. JSC, 6.75%, 4/26/21 (1) USD ,000 Total Georgia $ 691,689 Honduras 0.5% Inversiones Atlantida SA, 8.25%, 7/28/22 (1) USD 340 $ 351,900 Total Honduras $ 351,900 India 0.2% Power Finance Corp, Ltd., 7.47%, 9/16/21 INR 4,000 $ 62,564 Power Finance Corp, Ltd., 7.75%, 3/22/27 INR 4,000 64,612 Total India $ 127,176 8 See Notes to Financial Statements.

11 Portfolio of Investments continued Security Principal Amount (000 s omitted) Value Short-Term Investments 15.0% Foreign Government Securities 5.7% Mexico 0.1% Petroleos Mexicanos, 7.19%, 9/12/24 (2) MXN 1,420 $ 71,884 Petroleos Mexicanos, 7.65%, 11/24/21 MXN ,034 Total Mexico $ 94,918 Total Foreign Corporate Bonds (identified cost $3,939,516) $ 3,630,138 Sovereign Loans 5.0% Borrower Barbados 1.5% Principal Amount (000 s omitted) Value Government of Barbados, Term Loan, 11.44%, Maturing December 20, 2019 USD 1,100 $ 1,101,788 Total Barbados $ 1,101,788 Ethiopia 0.3% Ethiopian Railways Corporation (Federal Democratic Republic of Ethiopia guaranteed), Term Loan, 5.10%, Maturing August 1, 2021 (6)(7) USD 200 $ 197,834 Total Ethiopia $ 197,834 Kenya 0.5% Government of Kenya, Term Loan, 6.42%, Maturing April 18, 2019 (6) USD 90 $ 90,000 Government of Kenya, Term Loan, 6.63%, Maturing October 28, 2017 (6) USD ,000 Total Kenya $ 350,000 Macedonia 1.7% Republic of Macedonia, Term Loan, 3.60%, Maturing December 16, 2022 (8)(9) EUR 1,000 $ 1,214,598 Total Macedonia $ 1,214,598 Security Egypt 3.4% Principal Amount (000 s omitted) Value Egypt Treasury Bill, 0.00%, 8/8/17 EGP 6,775 $ 377,178 Egypt Treasury Bill, 0.00%, 10/17/17 EGP 2, ,974 Egypt Treasury Bill, 0.00%, 11/14/17 EGP 19,650 1,041,437 Egypt Treasury Bill, 0.00%, 1/9/18 EGP 1,900 97,401 Egypt Treasury Bill, 0.00%, 1/16/18 EGP 15, ,885 Total Egypt $ 2,449,875 Georgia 0.4% Georgia Treasury Bill, 0.00%, 2/1/18 GEL 250 $ 100,684 Georgia Treasury Bill, 0.00%, 7/19/18 GEL ,684 Total Georgia $ 322,368 Kazakhstan 1.9% National Bank of Kazakhstan Note, 0.00%, 9/29/17 KZT 313,150 $ 936,062 National Bank of Kazakhstan Note, 0.00%, 10/6/17 KZT 66, ,190 National Bank of Kazakhstan Note, 0.00%, 10/20/17 KZT 73, ,870 Total Kazakhstan $ 1,352,122 Total Foreign Government Securities (identified cost $4,152,709) $ 4,124,365 U.S. Treasury Obligations 2.2% Security Principal Amount (000 s omitted) Value U.S. Treasury Bill, 0.00%, 8/10/17 (10) $ 600 $ 599,858 U.S. Treasury Bill, 0.00%, 9/28/17 (10) 1, ,437 Total U.S. Treasury Obligations (identified cost $1,598,373) $ 1,598,295 Tanzania 1.0% Government of the United Republic of Tanzania, Term Loan, 7.15%, Maturing June 23, 2022 USD 725 $ 724,010 Total Tanzania $ 724,010 Total Sovereign Loans (identified cost $3,428,366) $ 3,588,230 9 See Notes to Financial Statements.

12 Portfolio of Investments continued Other 7.1% Description Units Value Eaton Vance Cash Reserves Fund, LLC, 1.28% (12) 5,127,284 $ 5,128,310 Total Other (identified cost $5,128,310) $ 5,128,310 Total Short-Term Investments (identified cost $10,879,392) $10,850,970 Total Investments 98.4% (identified cost $70,048,528) $71,201,647 Less Unfunded Loan Commitments (0.7)% $ (524,000) Net Investments 97.7% (identified cost $69,524,528) $70,677,647 Other Assets, Less Liabilities 2.3% $ 1,697,269 Net Assets 100.0% $72,374,916 The percentage shown for each investment category in the Portfolio of Investments is based on net assets. (1) Security exempt from registration under Regulation S of the Securities Act of 1933, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) At, the aggregate value of these securities is $27,443,371 or 37.9% of the Fund s net assets. Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be sold in certain transactions in reliance on an exemption from registration (normally to qualified institutional buyers). At, the aggregate value of these securities is $2,824,464 or 3.9% of the Fund s net assets. Inflation-linked security whose principal is adjusted for inflation based on changes in a designated inflation index or inflation rate for the applicable country. Interest is calculated based on the inflation-adjusted principal. Variable rate security. The stated interest rate represents the rate in effect at. Defaulted security. Issuer has defaulted on the payment of interest and/or principal. Variable interest rate that updates semiannually based on changes to the London Interbank Offered Rate (LIBOR). The stated interest rate represents the rate in effect at. Loan is subject to scheduled mandatory prepayments. Maturity date shown reflects the final maturity date. Variable interest rate that updates semiannually based on changes to the Euro Interbank Offered Rate (Euribor). The stated interest rate represents a weighted average rate at. Unfunded or partially unfunded loan commitments. See Note 1F for description. Security (or a portion thereof) has been pledged to cover collateral requirements on open derivative contracts. Multi-step coupon bond. Interest rate represents the rate in effect at. Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of. Forward Foreign Currency Exchange Contracts Currency Purchased Currency Sold Counterparty Settlement Date Unrealized Appreciation Unrealized (Depreciation) BRL 1,790,000 USD 542,589 BNP Paribas 8/2/17 $31,433 $ BRL 1,790,000 USD 571,757 Standard Chartered Bank 8/2/17 2,264 USD 571,757 BRL 1,790,000 BNP Paribas 8/2/17 (2,264) USD 538,370 BRL 1,790,000 Standard Chartered Bank 8/2/17 (35,651) KZT 460,000,000 USD 1,367,013 Deutsche Bank AG 8/3/17 28,847 USD 1,406,255 KZT 460,000,000 Deutsche Bank AG 8/3/17 10,395 RUB 10,014,255 USD 166,918 Deutsche Bank AG 8/7/ RUB 40,640,000 USD 674,411 Goldman Sachs International 8/7/17 4,660 RUB 38,000,000 USD 646,566 Goldman Sachs International 8/7/17 (11,608) RUB 81,290,000 USD 1,383,142 Goldman Sachs International 8/7/17 (24,833) USD 677,390 RUB 40,640,000 Deutsche Bank AG 8/7/17 (1,681) USD 2,145,773 RUB 129,304,255 Goldman Sachs International 8/7/17 (14,827) TRY 7,709,000 USD 2,110,089 BNP Paribas 8/8/17 75,844 IDR 13,060,600,900 USD 976,713 Bank of America, N.A. 8/14/17 2,663 EUR 1,028,774 RSD 128,000,000 Deutsche Bank AG 8/17/17 (41,460) EGP 21,785,000 USD 1,237,784 BNP Paribas 8/21/17 (28,550) RUB 19,759,201 USD 329,705 Deutsche Bank AG 8/22/17 (472) RUB 129,304,255 USD 2,139,134 Goldman Sachs International 8/22/17 15, See Notes to Financial Statements.

13 Portfolio of Investments continued Forward Foreign Currency Exchange Contracts (continued) Currency Purchased Currency Sold Counterparty Settlement Date Unrealized Appreciation Unrealized (Depreciation) RUB 4,024,840 USD 67,286 Goldman Sachs International 8/22/17 $ $ (224) RUB 1,456,000 USD 24,303 Standard Chartered Bank 8/22/17 (43) RUB 4,573,116 USD 76,516 Standard Chartered Bank 8/22/17 (318) RUB 17,263,800 USD 289,676 Standard Chartered Bank 8/22/17 (2,022) USD 610,935 RUB 36,544,000 Goldman Sachs International 8/22/17 2,030 USD 1,648,328 RUB 99,197,212 Goldman Sachs International 8/22/17 (4,521) USD 672,325 RUB 40,640,000 Goldman Sachs International 8/22/17 (4,830) MXN 9,429,768 USD 513,686 Goldman Sachs International 8/23/17 14,215 UGX 2,983,617,000 USD 814,084 ICBC Standard Bank plc 9/13/17 1,073 COP 5,924,900,000 USD 1,949,076 Standard Chartered Bank 9/21/17 23,712 USD 5,939,318 EUR 5,169,119 Standard Chartered Bank 9/28/17 (198,651) TRY 5,200,000 USD 1,438,684 Goldman Sachs International 9/29/17 13,376 USD 361,503 EUR 313,617 Standard Chartered Bank 10/5/17 (11,038) USD 459,137 EUR 398,318 Standard Chartered Bank 10/5/17 (14,019) USD 650,836 EUR 555,558 Goldman Sachs International 10/20/17 (9,619) USD 2,901,906 EUR 2,477,086 Goldman Sachs International 10/20/17 (42,889) ARS 24,000,000 USD 1,420,118 UBS AG 10/24/17 (124,489) UGX 4,512,382,000 USD 1,206,519 Standard Chartered Bank 1/11/18 (23,151) KZT 460,000,000 USD 1,364,540 Deutsche Bank AG 1/29/18 (16,422) USD 623,199 THB 21,475,447 Deutsche Bank AG 3/26/18 (22,901) USD 780,965 THB 26,936,272 Deutsche Bank AG 3/26/18 (29,427) $226,292 $(665,910) Futures Contracts Description Contracts Position Expiration Month/Year Aggregate Cost Value Net Unrealized Appreciation Interest Rate Futures Euro-Bobl 3 Short Sep-17 $ (473,047) $ (468,998) $ 4,049 U.S. 5-Year Deliverable Interest Rate Swap 45 Short Sep-17 (4,516,689) (4,511,953) 4,736 U.S. 10-Year Deliverable Interest Rate Swap 65 Short Sep-17 (6,653,359) (6,625,937) 27,422 $36,207 Euro-Bobl: Medium-term debt securities issued by the Federal Republic of Germany with a term to maturity of 4.5 to 5 years. Centrally Cleared Interest Rate Swaps Counterparty Notional Amount (000 s omitted) Fund Pays/Receives Floating Rate Floating Rate Annual Fixed Rate Termination Date Net Unrealized Appreciation (Depreciation) CME Group, Inc. MXN 34,000 Pays Mexico Interbank TIIE 28 Day 6.08% 4/30/26 $(128,358) CME Group, Inc. MXN 24,805 Pays Mexico Interbank TIIE 28 Day /30/26 (94,778) CME Group, Inc. MXN 7,639 Pays Mexico Interbank TIIE 28 Day /20/26 (26,320) CME Group, Inc. MXN 13,615 Pays Mexico Interbank TIIE 28 Day /20/26 (46,652) CME Group, Inc. MXN 8,550 Pays Mexico Interbank TIIE 28 Day /24/26 (21,535) LCH.Clearnet (1) EUR 2,243 Receives 6-month Euro Interbank Offered Rate 0.25 (2) 9/20/22 (423) LCH.Clearnet (1) USD 2,650 Receives 3-month USD-LIBOR 1.75 (2) 9/20/19 (2,015) 11 See Notes to Financial Statements.

14 Portfolio of Investments continued Centrally Cleared Interest Rate Swaps (continued) Counterparty Notional Amount (000 s omitted) Fund Pays/Receives Floating Rate Floating Rate Annual Fixed Rate Termination Date Net Unrealized Appreciation (Depreciation) LCH.Clearnet USD 1,004 Receives 3-month USD-LIBOR 1.37% 7/14/26 $ 67,013 LCH.Clearnet USD 350 Receives 3-month USD-LIBOR /7/26 17,796 $(235,272) (1) (2) Effective date, which represents the date on which the Fund and the counterparty to the interest rate swap begin interest payment accrual, is after. Upfront payment is exchanged with the counterparty as a result of the standardized trading coupon. Interest Rate Swaps Counterparty Notional Amount (000 s omitted) Fund Pays/Receives Floating Rate Floating Rate Annual Fixed Rate Termination Date Net Unrealized Appreciation (Depreciation) Bank of America, N.A. MXN 2,844 Pays Mexico Interbank TIIE 28 Day 6.63% 3/19/24 $ (2,816) Deutsche Bank AG COP 5,356,400 Pays Colombia Overnight Interbank Reference Rate /21/19 10,877 Deutsche Bank AG COP 1,057,900 Pays Colombia Overnight Interbank Reference Rate /22/19 1,682 Deutsche Bank AG COP 1,431,400 Pays Colombia Overnight Interbank Reference Rate /26/19 1,950 Goldman Sachs International COP 5,356,300 Pays Colombia Overnight Interbank Reference Rate /21/19 10,725 Goldman Sachs International COP 9,300,000 Pays Colombia Overnight Interbank Reference Rate /24/19 2,910 $25,328 Credit Default Swaps Sell Protection Reference Entity Counterparty Notional Amount* (000 s omitted) Contract Annual Fixed Rate** Termination Date Current Market Annual Fixed Rate*** Market Value Unamortized Upfront Payments Received (Paid) Net Unrealized Appreciation Bahamas Deutsche Bank AG $ % (1) 6/20/ % $ (46,754) $ 52,713 $5,959 Turkey Deutsche Bank AG 1, (1) 6/20/ (234,443) 238,342 3,899 Total $2,350 $(281,197) $291,055 $9,858 * If the Fund is the seller of credit protection, the notional amount is the maximum potential amount of future payments the Fund could be required to make ifa credit event, as defined in the credit default swap agreement, were to occur. At, such maximum potential amount for all open credit default swaps in which the Fund is the seller was $2,350,000. ** The contract annual fixed rate represents the fixed rate of interest received by the Fund (as a seller of protection) on the notional amount of the credit default swap contract. *** Current market annual fixed rates, utilized in determining the net unrealized appreciation or depreciation as of period end, serve as an indicator of the market s perception of the current status of the payment/performance risk associated with the credit derivative. The current market annual fixed rate of a particular reference entity reflects the cost, as quoted by the pricing vendor, of selling protection against default of that entity as of period end and may include upfront payments required to be made to enter into the agreement. The higher the fixed rate, the greater the market perceived risk of a credit event involving the reference entity. A rate identified as Defaulted indicates a credit event has occurred for the reference entity. (1) Upfront payment is exchanged with the counterparty as a result of the standardized trading coupon. 12 See Notes to Financial Statements.

15 Portfolio of Investments continued Currency Abbreviations: ALL Albanian Lek ARS Argentine Peso BAM Bosnia-Herzegovina Convertible Mark BRL Brazilian Real COP Colombian Peso DOP Dominican Peso EGP Egyptian Pound EUR Euro GEL Georgian Lari IDR Indonesian Rupiah INR Indian Rupee KZT Kazakhstani Tenge LKR Sri Lankan Rupee MXN Mexican Peso PEN Peruvian Sol RSD Serbian Dinar RUB Russian Ruble THB Thai Baht TRY New Turkish Lira UGX Ugandan Shilling USD United States Dollar 13 See Notes to Financial Statements.

16 Statement of Assets and Liabilities Assets Unaffiliated investments, at value (identified cost, $64,396,218) $65,549,337 Affiliated investment, at value (identified cost, $5,128,310) 5,128,310 Cash 622,447 Restricted cash* 411,791 Foreign currency, at value (identified cost, $262,938) 265,967 Interest receivable 1,265,138 Dividends receivable from affiliated investment 3,743 Receivable for Fund shares sold 13,808 Receivable for variation margin on open centrally cleared swap contracts 6,893 Receivable for open forward foreign currency exchange contracts 226,292 Receivable for open swap contracts 38,002 Tax reclaims receivable 19,119 Receivable from affiliate 14,089 Total assets $73,564,936 Liabilities Payable for Fund shares redeemed $ 1,899 Payable for variation margin on open financial futures contracts 1,035 Payable for open forward foreign currency exchange contracts 665,910 Payable for open swap contracts 2,816 Premium received on open non-centrally cleared swap contracts 291,055 Payable to affiliate: Investment adviser and administration fee 39,725 Distribution and service fees 65 Accrued foreign capital gains taxes 33,930 Accrued expenses 153,585 Total liabilities $ 1,190,020 Net Assets $72,374,916 Sources of Net Assets Common shares, $0.001 par value, 1,000,000,000 shares authorized (see Note 7), 7,650,760 shares issued and outstanding $ 7,651 Additional paid-in capital 72,558,301 Accumulated net realized loss (799,198) Accumulated undistributed net investment income 95,910 Net unrealized appreciation 512,252 Total $72,374,916 Class A Shares Net Assets $ 329,645 Shares Outstanding 34,843 Net Asset Value and Redemption Price Per Share (net assets shares outstanding) $ 9.46 Maximum Offering Price Per Share ( of net asset value per share) $ 9.93 Class I Shares Net Assets $ 1,060,354 Shares Outstanding 111,759 Net Asset Value, Offering Price and Redemption Price Per Share (net assets shares outstanding) $ 9.49 Class R6 Shares Net Assets $70,984,917 Shares Outstanding 7,504,158 Net Asset Value, Offering Price and Redemption Price Per Share (net assets shares outstanding) $ 9.46 On sales of $50,000 or more, the offering price of Class A shares is reduced. * Represents restricted cash on deposit at the broker for open derivative contracts. 14 See Notes to Financial Statements.

17 Statement of Operations Investment Income Year Ended Interest (net of foreign taxes, $71,267) $ 5,069,697 Interest allocated from/dividends from affiliated investment 32,919 Expenses allocated from affiliated investment (110) Total investment income $ 5,102,506 Expenses Investment adviser and administration fee $ 441,334 Distribution and service fees Class A 357 Directors fees and expenses 4,400 Custodian fee 145,593 Transfer and dividend disbursing agent fees 2,054 Legal and accounting services 127,351 Printing and postage 8,915 Registration fees 52,994 Interest expense 7,336 Miscellaneous 27,997 Total expenses $ 818,331 Deduct Allocation of expenses to affiliate $ 233,360 Total expense reductions $ 233,360 Net expenses $ 584,971 Net investment income $ 4,517,535 Realized and Unrealized Gain (Loss) Net realized gain (loss) Investment transactions (net of foreign capital gains taxes of $12,101) $ 1,204,909 Investment transactions in/allocated from affiliated investment 1,197 Financial futures contracts 518,977 Swap contracts 1,151,774 Foreign currency transactions (134,635) Forward foreign currency exchange contract transactions 563,028 Net realized gain $ 3,305,250 Change in unrealized appreciation (depreciation) Investments (including net decrease of $22,714 in accrued foreign capital gains taxes) $ (329,155) Financial futures contracts 173,520 Swap contracts (859,270) Foreign currency 17,541 Forward foreign currency exchange contracts (531,907) Net change in unrealized appreciation (depreciation) $(1,529,271) Net realized and unrealized gain $ 1,775,979 Net increase in net assets from operations $ 6,293, See Notes to Financial Statements.

18 Statements of Changes in Net Assets Increase (Decrease) in Net Assets Year Ended Year Ended July 31, 2016 From operations Net investment income $ 4,517,535 $ 3,535,387 Net realized gain (loss) from investment transactions, financial futures contracts, swap contracts, foreign currency and forward foreign currency exchange contract transactions and non-deliverable bond forward contracts 3,305,250 (4,772,250) Net change in unrealized appreciation (depreciation) from investments, financial futures contracts, swap contracts, foreign currency, forward foreign currency exchange contracts and non-deliverable bond forward contracts (1,529,271) 5,171,353 Net increase in net assets from operations $ 6,293,514 $ 3,934,490 Distributions to shareholders From net investment income Class A $ (12,453) $ (14) Class I (36,032) (184) Class R6 (5,617,516) (755,377) Total distributions to shareholders $ (5,666,001) $ (755,575) Transactions in common shares Proceeds from sale of shares Class A $ 295,438 $ 95,118 Class I 1,012,850 61,627 Class R6 4,289,587 13,263,826 Net asset value of shares issued to shareholders in payment of distributions declared Class A 12, Class I 36, Class R6 4,405, ,377 Cost of shares redeemed Class A (23,852) (54,259) Class I (42,881) (28,764) Class R6 (2,723,022) (927,332) Net increase in net assets from Fund share transactions $ 7,262,177 $13,165,791 Net increase in net assets $ 7,889,690 $16,344,706 Net Assets At beginning of year $64,485,226 $48,140,520 At end of year $72,374,916 $64,485,226 Accumulated undistributed net investment income (loss) included in net assets At end of year $ 95,910 $ (133,565) 16 See Notes to Financial Statements.

19 Financial Highlights Year Ended Class A Period Ended July 31, 2016 (1) Net asset value Beginning of period $ $ Income (Loss) From Operations Net investment income (2) $ $ Net realized and unrealized gain Total income from operations $ $ Less Distributions From net investment income $(0.762) $(0.118) Total distributions $(0.762) $(0.118) Net asset value End of period $ $ Total Return (3)(4) 9.18% 9.16% (5) Ratios/Supplemental Data Net assets, end of period (000 s omitted) $ 330 $ 45 Ratios (as a percentage of average daily net assets): Expenses (4) 1.16% (6) 1.15% (7) Net investment income 6.46% 6.74% (7) Portfolio Turnover 70% 85% (8) (1) (2) (3) (4) (5) (6) (7) (8) For the period from commencement of operations on September 3, 2015 to July 31, Computed using average shares outstanding. Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. The investment adviser and administrator reimbursed certain operating expenses (equal to 0.34% and 1.15% of average daily net assets for the year ended and the period from commencement of operations on September 3, 2015 to July 31, 2016, respectively). Absent this reimbursement, total return would be lower. Not annualized. Includes interest expense of 0.01% for the year ended. Annualized. For the year ended July 31, See Notes to Financial Statements.

20 Financial Highlights continued Year Ended Class I Period Ended July 31, 2016 (1) Net asset value Beginning of period $ $ Income (Loss) From Operations Net investment income (2) $ $ Net realized and unrealized gain Total income from operations $ $ Less Distributions From net investment income $(0.783) $(0.140) Total distributions $(0.783) $(0.140) Net asset value End of period $ $ Total Return (3)(4) 9.51% 9.67% (5) Ratios/Supplemental Data Net assets, end of period (000 s omitted) $ 1,060 $ 34 Ratios (as a percentage of average daily net assets): Expenses (4) 0.91% (6) 0.90% (7) Net investment income 6.90% 6.84% (7) Portfolio Turnover 70% 85% (8) (1) (2) (3) (4) (5) (6) (7) (8) For the period from commencement of operations on September 3, 2015 to July 31, Computed using average shares outstanding. Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. The investment adviser and administrator reimbursed certain operating expenses (equal to 0.34% and 1.15% of average daily net assets for the year ended and the period from commencement of operations on September 3, 2015 to July 31, 2016, respectively). Absent this reimbursement, total return would be lower. Not annualized. Includes interest expense of 0.01% for the year ended. Annualized. For the year ended July 31, See Notes to Financial Statements.

21 Financial Highlights continued Class R6 Year Ended Year Ended July 31, 2016 Year Ended July 31, 2015 Year Ended July 31, 2014 Period Ended July 31, 2013 (1) Net asset value Beginning of period $ $ $ $ $ Income (Loss) From Operations Net investment income (2) $ $ $ $ $ Net realized and unrealized gain (loss) (0.119) (3) (1.005) (0.563) Total income (loss) from operations $ $ $ (0.459) $ $ (0.390) Less Distributions From net investment income $ (0.785) $ (0.142) $ (0.361) $ (0.329) $ From net realized gain (0.022) Total distributions $ (0.785) $ (0.142) $ (0.361) $ (0.351) $ Net asset value End of period $ $ $ $ $ Total Return (4)(5) 9.57% 5.37% (4.55)% 6.64% (3.90)% (6) Ratios/Supplemental Data Net assets, end of period (000 s omitted) $70,985 $64,407 $48,141 $50,478 $14,518 Ratios (as a percentage of average daily net assets): Expenses (5)(7) 0.86% (8) 0.85% 0.85% 0.85% 0.85% (9) Net investment income 6.65% 6.68% 5.82% 4.66% 3.58% (9) Portfolio Turnover 70% 85% 74% 90% 0% (6) (1) (2) (3) (4) (5) (6) (7) (8) (9) For the period from commencement of operations on February 4, 2013 to July 31, Computed using average shares outstanding. The per share amount is not in accord with the net realized and unrealized gain (loss) on investments for the period because of the timing of sales of Fund shares and the amount of the per share realized and unrealized gains and losses at such time. Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. The investment adviser and administrator reimbursed certain operating expenses (equal to 0.34%, 0.49%, 0.43%, 1.01% and 2.16% of average daily net assets for the years ended, 2016, 2015 and 2014 and the period from commencement of operations on February 4, 2013 to July 31, 2013, respectively). Absent this reimbursement, total return would be lower. Not annualized. Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. Includes interest expense of 0.01% for the year ended. Annualized. 19 See Notes to Financial Statements.

22 Notes to Financial Statements 1 Significant Accounting Policies Eaton Vance (the Fund) is a non-diversified series of Eaton Vance Series Fund, Inc. (the Corporation). The Corporation is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund s investment objective is total return. Effective September 3, 2015, the Fund designated its existing shares as Class R6 and established two new classes of shares named Class A and Class I. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class I and Class R6 shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Sub-accounting, recordkeeping and similar administrative fees payable to financial intermediaries, which are a component of transfer and dividend disbursing agent fees on the Statement of Operations, are not allocated to Class R6 shares. Each class of shares differs in its distribution plan and certain other class-specific expenses. The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946. A Investment Valuation The following methodologies are used to determine the market value or fair value of investments. Debt Obligations. Debt obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value. Derivatives. Financial futures contracts are valued at the closing settlement price established by the board of trade or exchange on which they are traded. Forward foreign currency exchange contracts are generally valued at the mean of the average bid and average asked prices that are reported by currency dealers to a third party pricing service at the valuation time. Such third party pricing service valuations are supplied for specific settlement periods and the Fund s forward foreign currency exchange contracts are valued at an interpolated rate between the closest preceding and subsequent settlement period reported by the third party pricing service. Non-deliverable bond forward contracts are generally valued based on the current price of the underlying bond as provided by a third party pricing service and current interest rates. Swaps are normally valued using valuations provided by a third party pricing service. Such pricing service valuations are based on the present value of fixed and projected floating rate cash flows over the term of the swap contract, and in the case of credit default swaps, based on credit spread quotations obtained from broker/dealers and expected default recovery rates determined by the pricing service using proprietary models. Future cash flows on swaps are discounted to their present value using swap rates provided by electronic data services or by broker/dealers. Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service. Prior to Cash Reserves Fund s issuance of units in October 2016, the value of the Fund s investment in Cash Reserves Fund reflected the Fund s proportionate interest in its net assets and the Fund recorded its pro-rata share of Cash Reserves Fund s income, expenses and realized gain or loss. Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Directors of the Fund in a manner that fairly reflects the security s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company s or entity s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold. B Investment Transactions Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost. C Income Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Inflation adjustments to the principal amount of inflation-adjusted bonds and notes are reflected as interest income. Withholding taxes on foreign interest and capital gains have been provided for in accordance with the Fund s understanding of the applicable countries tax rules and rates. 20