UNITED STATES SECURITIES AND EXCHANGE COMMISSION ...

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, 2019

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:

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

Non-Voting Common Stock, $0.00390625 par value

Trading Symbol(s) EV

Name of each exchange on which registered 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

Non-accelerated filer

Emerging growth company

Accelerated filer

Smaller reporting 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 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 $41.57 on April 30, 2019 on the New York Stock Exchange was $4,581,448,621. 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 NonVoting 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, 2019

Non-Voting Common Stock, $0.00390625 par value

113,143,567

Voting Common Stock, $0.00390625 par value

422,935

Required Information

Part I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4.

Part II Item 5.

Item 6. Item 7.

Item 7A.

Item 8. Item 9.

Item 9A. Item 9B.

Part III Item 10. Item 11. Item 12.

Item 13.

Item 14.

Part IV Item 15. Item 16.

Signatures

Eaton Vance Corp. Form 10-K

For the Fiscal Year Ended October 31, 2019 Index

Page Number Reference

Business ..................................................................................... 3 Risk Factors ................................................................................ 20 Unresolved Staff Comments ...................................................... 28 Properties .................................................................................. 28 Legal Proceedings ...................................................................... 29 Mine Safety Disclosures............................................................. 29

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.................................................................................. 30 Selected Financial Data.............................................................. 33 Management's Discussion and Analysis of Financial Condition and Results of Operations ....................................... 34 Quantitative and Qualitative Disclosures About Market Risk .............................................................................. 64 Financial Statements and Supplementary Data ........................ 67 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........................................ 136 Controls and Procedures ........................................................... 136 Other Information...................................................................... 138

Directors, Executive Officers and Corporate Governance ......... 139 Executive Compensation ........................................................... 147 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..................... 177 Certain Relationships and Related Transactions, and Director Independence .......................................................................... 182 Principal Accountant Fees and Services .................................... 183

Exhibits and Financial Statement Schedules.............................. 184 Form 10-K Summary .................................................................. 187 ................................................................................................... 189

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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 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 forwardthinking 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, 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 Eaton Vance Management, 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 alternatives and managed options strategies. Through Parametric, we also provide custom portfolio implementation and overlay services,

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including tax-managed and non-tax-managed Custom CoreTM equity strategies, centralized portfolio management of multi-manager portfolios and exposure management services. 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, 2019, we had $497.4 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 brokerdealers, independent broker-dealers, registered investment advisors, banks and insurance companies. We support these distribution partners with a team of approximately 130 sales professionals covering U.S. and international markets.

We employ a team of approximately 40 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.

Company History

We have been in the investment management business for over 90 years, tracing our history to two Bostonbased 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 open-end 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 our fiscal 2017 purchase of substantially all of the business assets of Calvert Investment Management, Inc. (Calvert Investments), Parametric's fiscal 2013 purchase of The Clifton Group Investment Management Company (Clifton) and our fiscal 2012 purchase of a 49 percent interest in Hexavest.

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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 subadvised by other Eaton Vance affiliates, have grown to $19.8 billion at October 31, 2019. The 66 percent growth in Calvert's managed assets since becoming a part of Eaton Vance in December 2016 reflects net inflows of $5.1 billion and market price appreciation of $2.7 billion.

The fiscal 2012 purchase of Clifton provided Parametric with a market-leading position in futures- and optionsbased portfolio implementation services and risk-management strategies. Managed assets of Parametric's Clifton-sourced investment strategies and services have grown from $34.8 billion at purchase in December 2012 to $111.0 billion on October 31, 2019.

In fiscal 2012, we expanded our global equity offerings by acquiring a 49 percent interest in Hexavest, a Montreal-based investment adviser, and became Hexavest's exclusive distribution partner in all markets outside Canada. Hexavest's assets under management have grown from $11.0 billion at purchase in August 2012 to $13.4 billion on October 31, 2019.

In June 2019, we announced a strategic initiative involving our Parametric and Eaton Vance Management investment affiliates to further strengthen our leadership positions in rules-based, systematic investment strategies, customized individual separate accounts and wealth management solutions as discussed in greater detail in Current Developments under this Item 1 of the Company's Annual Report on Form 10-K. The internal change process supporting this initiative is targeted for completion in the first quarter of fiscal 2020.

Investment Managers and Distributors

We conduct our consolidated investment management business through Eaton Vance Management, 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 Investment Counsel (EVIC), Eaton Vance Management (International) Limited (EVMI) and Eaton Vance Trust Company (EVTC). Eaton Vance Management, Parametric, Atlanta Capital, Calvert, BMR, EVAIL, EVIC and EVMI 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 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 whollyowned 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 Eaton Vance-, Parametric- and Calvert-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

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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; 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 four primary strategic priorities: (1) capitalizing on the near-term growth opportunities presented by our market-leading positions in customized individual separate accounts, responsible investing, specialty wealth management strategies and services, and the array of high-performing actively managed investment strategies we offer across asset classes and investment styles; (2) defending our floating-rate bank loan, global macro absolute return, systematic emerging market equity and closed-end fund businesses; (3) enhancing our competitive position by lowering operating costs, advancing our succession planning, developing new value-added investment offerings and opportunistically pursuing potential acquisitions; and (4) investing in the Company's future by committing additional resources to building our technology and operating infrastructure, leadership and staff development, and diversity and inclusion strategies.

In fiscal 2019, we continued to experience strong growth in our customized, benchmark-based individual separate account offerings, which include Parametric Custom Core equity and Eaton Vance Management laddered municipal and corporate bond strategies. 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 2019, net inflows into our customized, benchmark-based strategies offered as individual separate accounts totaled $15.3 billion, generating internal growth in managed assets of 18 percent.

In June 2019, we announced a strategic initiative involving our Parametric and Eaton Vance Management affiliates to further strengthen our leadership positions in rules-based, systematic investment strategies, customized individual separate accounts and wealth management solutions. The three principal components of the initiative are: (1) rebranding Eaton Vance Management's rules-based, systematic investment-grade fixed income strategies as Parametric and aligning internal reporting consistent with the revised branding; (2) combining the technology and operating platforms supporting the individual separately managed account businesses of Parametric and Eaton Vance Management; and (3) integrating the distribution teams serving Parametric and Eaton Vance Management clients and business partners in the registered investment advisor and multi-family office market. Through this strategic initiative, Parametric's customized individual separate

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account offerings will expand to encompass a range of systematic fixed income strategies and maturity-based and liability-driven portfolio benchmarks. By expanding Parametric's solution set and investing in technology to enhance client service and realize operating efficiencies and scale economies, we seek to further strengthen Parametric's leadership position in the rapidly growing market for customized individual separate accounts.

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 $19.8 billion at October 31, 2019 from $14.7 billion at October 31, 2018, reflecting net inflows of $3.7 billion and market price appreciation of $1.4 billion. Calvert's $3.7 billion of net inflows in fiscal 2019 equates to internal growth in managed assets of 25 percent.

While Calvert is the centerpiece of our responsible investment strategy, our commitment to responsible investing also encompasses our other investment affiliates. Eaton Vance Management and Atlanta Capital are increasingly utilizing Calvert's proprietary ESG research as a component of their fundamental research processes, and portfolio customization to reflect individual client's responsible investment criteria remains a central feature of Parametric separate account offerings. As of October 31, 2019, Parametric managed $23.7 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.

Fiscal 2019 was a period of continuing strong investment performance across our principal investment affiliates. As of October 31, 2019, we sponsored 76 U.S. mutual funds with an overall MorningstarTM rating of four or five stars 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 46 percent of our U.S. mutual fund assets ranked in the top quartile of their Morningstar peer groups over three years, 62 percent in the top quartile over five years and 58 percent in the top quartile over ten years. In the annual Barron's/Lipper rankings of Best Mutual Fund Families for calendar 2018, Eaton Vance, Calvert and Parametric collectively ranked third overall among 57 fund families rated for one-year performance, 7th among 55 fund families based on five-year returns and 32nd among 49 families for ten-year performance. Among the active investment strategies we offer, notable high performers versus peers include: Atlanta Capital core and growth equities; Calvert growth, small-cap, emerging market and international equities; Eaton Vance Management balanced, core-plus bond, emerging market local income, floating-rate loan, global equity income, national municipal income and short-duration government income; and Parametric international equity.

Demand for floating-rate loan strategies contracted in fiscal 2019 as investors responded to changing expectations for short-term interest rates in the U.S. and internationally. Our floating-rate income category moved from net inflows of $5.9 billion in fiscal 2018 to net outflows of $8.3 billion in fiscal 2019. During the fiscal year, our market share among bank loan mutual funds increased as the pace of industry net outflows exceeded our own. Recent Federal Reserve signaling of a stable near-term outlook for short-term interest rates suggests that bank loan fund flows may improve in 2020.

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In our alternatives reporting category, fiscal 2019 net outflows of $3.9 billion were driven by $2.7 billion of net withdrawals from the two global macro absolute return mutual funds we offer in the U.S. and nearly $1.0 billion of net outflows from global macro institutional sub-advisory mandates. These strategies, which hold long and short positions in currency and short-duration sovereign debt instruments of emerging and frontier market countries, generated disappointing returns in calendar 2018 but rebounded to solid performance in 2019. Improved near-term performance coupled with generally muted return expectations for most traditional asset classes create an environment for potentially improved flows of our global macro absolute strategies in 2020.

In February 2019, Eaton Vance Management and related parties filed an application for exemptive relief with the SEC, seeking permission to offer exchange-traded funds (ETFs) that would employ a novel method of supporting efficient secondary market trading of their shares. Because disclosure of current holdings would not be required, the portfolio trading activity of ETFs utilizing the proposed method could remain confidential. Different from other proposed approaches to less-transparent ETFs that have recently received SEC exemptive relief, we believe our method should be broadly applicable across fund asset classes and can support efficient secondary market trading of fund shares in all market conditions. In conjunction with filing the exemptive application, we formed a new wholly-owned subsidiary, Advanced Fund Solutions, to manage the development and commercialization of ETFs utilizing this new method, for which the timing and likelihood of approval remains uncertain.

As discussed above, in June 2019 we announced a strategic initiative that includes combining the technology and operating infrastructure supporting the individual separately managed account businesses of Parametric and Eaton Vance Management into a single consolidated platform. The combination is geared towards achieving higher levels of client service, operating efficiencies and scale economies.

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) Equity(2)

Fixed income(3)

% of

% of

% of

2019

Total

2018

Total

2017

Total

$ 131,895

27% $ 115,772

26% $ 113,472

27%

94,075

19%

77,844

18%

70,797

17%

Floating-rate income

35,103

7%

44,837

10%

38,819

9%

Alternative

8,372

2%

12,139

3%

12,637

3%

Portfolio implementation

133,198

26%

110,840

25%

99,615

23%

Exposure management

94,789

19%

77,871

18%

86,976

21%

Total

$ 497,432 100% $ 439,303 100% $ 422,316 100%

(1) Consolidated Eaton Vance Corp. See table on page 43 for 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.

(3) Includes cash management mandates.

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