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Eaton Vance Management
Two International Place
Boston, MA 02110
(617) 482-8260
www.eatonvance.com
August 31, 2015
Valerie J. Lithotomos
Senior Counsel
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re:
Eaton Vance NextShares Trust (File Nos.: 333-197733; 811-22982) (“Trust I”)
Eaton Vance NextShares Trust II (File Nos.: 333-197734; 811-22983) (“Trust II”)
(collectively, the “Trusts”)
Dear Ms. Lithotomos:
This letter responds to comments you provided telephonically to the undersigned on August 21, 2015 regarding pre-effective amendment no. 3 to each Trust’s registration statement on Form N-1A (“Pre-Eff. No. 3”) filed on behalf of its respective series1 (each a “Fund” and together the “Funds”) on July 30, 2015. Your comments and Registrants’ responses are set forth below. Attached hereto as Appendix A is a draft of the prospectus of National Municipal Income NextShares reflecting the disclosure changes included in responses to certain comments below (the “Draft Prospectus”).2 Each Registrant expects to file a pre-effective amendment to its registration statement (“Pre-Eff. No. 4”) reflecting the relevant disclosure changes described herein. Pre-Eff. No. 4 also will include relevant disclosure changes made to other Eaton Vance funds after the filing of Pre-Eff. No. 3, along with certain other immaterial changes. Reference to the “July Response Letter” herein is to the Registrants’ responses to your comments received telephonically on May 20, 2015 and reflected in correspondence filed on July 30, 2015 (Accession No. 0000940394-15-000973).
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1
The registration statement for Eaton Vance NextShares Trust registers shares of the following ten series: Eaton Vance Balanced NextShares (“Balanced NextShares”); Eaton Vance Global Dividend Income NextShares (“Global Dividend Income NextShares”); Eaton Vance Growth NextShares (“Growth NextShares”) (formerly Eaton Vance Large-Cap Growth ETMF); Eaton Vance Large-Cap Value NextShares (“Large-Cap Value NextShares”); Eaton Vance Small-Cap NextShares (“Small-Cap NextShares”); Eaton Vance Stock NextShares (“Stock NextShares”); Eaton Vance Richard Bernstein All Asset Strategy NextShares (“Bernstein All Asset Strategy NextShares”); Eaton Vance Richard Bernstein Equity Strategy NextShares (“Bernstein Equity Strategy NextShares”); Parametric Emerging Markets NextShares (“Parametric Emerging Markets NextShares”); and Parametric International Equity NextShares (“Parametric International Equity NextShares”).
The registration statement for Eaton Vance NextShares Trust II registers shares of the following eight series: Eaton Vance Bond NextShares (“Bond NextShares”); Eaton Vance Floating-Rate & High Income NextShares (“Floating-Rate & High Income NextShares”); Eaton Vance Global Macro Absolute Return NextShares (“Global Macro Absolute Return NextShares”); Eaton Vance Government Obligations NextShares (“Government Obligations NextShares”); Eaton High Income Opportunities NextShares (“High Income Opportunities NextShares”); Eaton Vance TABS 5-to-15 Year Laddered Municipal Bond NextShares (“Laddered Municipal Bond NextShares”); Eaton Vance High Yield Municipal Income NextShares (“High Yield Municipal Income NextShares”); and Eaton Vance National Municipal Income NextShares (“National Municipal Income NextShares”).
2
The Draft Prospectus is marked to show changes from the prospectus of National Municipal Income NextShares included in Pre-Eff. No. 3.
Valerie J. Lithotomos
August 31, 2015
Page 2 of 4
Comment No. 1: Please add additional disclosure to each Fund Summary concerning NextShares and the unique aspects to investors. Please also make clearer the manner in which NextShares will be purchased.
Response 1: The requested disclosure is included in the Draft Prospectus under “Fund Summary - About NextShares” (see page 3) and “- Purchases and Sales of Fund Shares” (see page 6). It will be added to each Fund’s prospectus included in Pre-Eff. No. 4. In adding this disclosure, Registrants were mindful of the requirements of Form N-1A regarding the form and content of the Fund Summary, and prepared the requested disclosure so as not to repeat in its entirety the disclosure under “Additional Information about NextShares” in the prospectus.
Comment No. 2: Please add the following disclosures to the narrative describing NextShares: (i) risk that NextShares do not sell; (ii) risk of being a new type of product; and (iii) risk of not making payments to intermediaries pursuant to a Rule 12b-1 plan.
Response 2: The requested disclosures are included in the Draft Prospectus under “Fund Summary - About NextShares” (see page 3) and will be added to each Fund’s prospectus in Pre-Eff. No. 4.
Comment No. 3: If Eaton Vance Management (“EVM”) is planning to use market maker incentive programs, please disclose this in the prospectus and explain the consequences to the Funds.
Response 3: EVM believes thatNasdaq Rule 5950, which establishes Nasdaq’s Market Quality Program (“MQP”), currently applies only to index-based exchange-traded funds (“ETFs”), and not to active ETFs or other exchange-traded products. As such, NextShares cannot currently participate in the MQP. In the event Rule 5950 is amended to apply to NextShares or NextShares are listed on other exchanges where they are permitted to participate in similar programs, the following disclosure will be added under “Distribution” in each Fund’s prospectus (see page 17 of the Draft Prospectus):
To the extent permitted by applicable law or relevant exchange rules, the Fund may in the future, but is not required to, participate in certain market maker incentive programs of a national securities exchange pursuant to which Eaton Vance would pay a fee to the exchange to be used for the purpose of incentivizing one or more market makers to enhance the liquidity and quality of the secondary market for Fund shares. The fee would be credited by the exchange to one or more market makers that meet or exceed liquidity and market quality standards with respect to Fund shares. Each market maker incentive program is subject to approval by the SEC. Any such fee payments made to an exchange will be made by Eaton Vance from its own resources and will not be paid by the Fund.
Comment No. 4: In order to include related performance in a Fund’s prospectus, provide a factual analysis for each Fund that supports its inclusion in accordance with the relevant no-action letters. Discuss the reasons why NextShares are not materially different from the accounts that generated the related performance.
Response 4: As noted in Response 1 in the July Response Letter, Registrants believe related performance information may be contained in the statutory prospectus for a Fund as long as it is not presented in a misleading manner and complies with conditions set forth in relevant no-action letters issued by the staff of the U.S. Securities Exchange Commission (“SEC”) (see ITT Harford Mutual Funds (pub. avail. Feb. 7, 1997);Nicholas-Applegate (pub. avail. Feb. 7, 1997);Nicholas-Applegate Mutual Funds (pub. avail. Aug. 6, 1996); andGE Funds (pub. avail. Feb. 7, 1997). Pursuant to these no-action letters, related performance must be (i) based on portfolios with substantially similar investment
Valerie J. Lithotomos
August 31, 2015
Page 3 of 4
policies, objectives, restrictions and strategies; (ii) calculated in accordance with applicable SEC standards; (iii) no more prominent than the fund’s own performance information; and (iv) accompanied by disclosure that (a) states the past performance shown represents results for different funds or accounts; (b) states the past performance of the related account is not indicative of past or future performance of the fund; (c) compares the related performance to a relevant index; and (v) describes all material differences between the fund and the accounts. As a factual matter, the funds and related accounts at issue in the above cited no-action letters were also advised by the same investment adviser and, where applicable, sub-adviser.
Attached as Appendix B is a comparative analysis of the adviser, sub-adviser (where applicable), investment policies, objective(s), investment restrictions and principal strategies of each Fund that included related performance in its prospectus filed in Pre-Eff. No. 3 and its related account(s).3 Registrants represent that the performance presented in each such Fund’s prospectus contained in Pre-Eff. No. 3 was calculated in accordance with applicable SEC standards. Furthermore, Registrants believe that the prospectus disclosure accompanying related performance includes the statements noted above in (iv)(a) through (c). Any material differences between the Funds and the related accounts also are disclosed in the accompanying prospectus disclosure. Because each Fund listed on Appendix B will be managed in substantially the same manner as the related account(s) reflected in its prospectus, EVM believes the related account performance information may be useful to investors considering an investment in a Fund. As described in detail in each Fund’s prospectus, NextShares are exchange-traded and offer structural efficiencies relative to other types of investment companies. EVM does not believe these differences are not material to the related performance as an illustration of the past performance of the adviser and any sub-adviser in managing a similar mandate.
Comment No. 5: The staff does not believe that the proposed definition of “global” in Global Dividend Income NextShares (“GDI Fund”) is consistent with Rule 35d-1.
Response 5: The disclosure in GDI Fund’s prospectus will be revised in Pre-Eff. No. 4 to state that under normal market conditions the Fund will invest: (i) at least 30% of its net assets in companies located outside of the United States, which may include emerging market countries; and (ii) in companies located in at least five different countries (including the United States). EVM believes that the foregoing investment policy is consistent with the use of “global” in GDI Fund’s name because it ensures not only the investment of a significant percentage of GDI Fund’s assets in non-U.S. companies, but also provides a minimum country diversification with respect to such investments. Registrants believe that GDI Fund’s policy “connote[s] diversification among investments in a number of different countries throughout the world” as specified in footnote 42 to the Investment Names Rule Adopting Release (Release No. IC-24828 (January 17, 2001).
Comment No. 6: Confirm that EVM’s Valuation Committee is not a standing committee of the Funds.
Response 6: EVM’s Valuation Committee is not a standing committee of the Funds.
Comment No. 7: In the second sentence of the fourth paragraph under “Buying and Selling Shares – Trading in the Secondary Market”, should “increase” be “decrease”?
Response 7: The noted sentence is describing the circumstances under which the costs to sell shares may increase, so “increase” is appropriate. The sentence has been clarified in the Draft Prospectus (see page 14) and will also be modified in the prospectuses included in Pre-Eff. No. 4.
______________________
3
EVM is the adviser to each Fund. As noted on Appendix B, certain of the related accounts included in the Fund prospectuses are advised by Boston Management and Research (“BMR”). EVM and BMR have the same investment personnel. Related performance will be removed from the prospectus for Laddered Municipal Bond NextShares in Pre-Eff. No. 4 and this Fund is not included on Appendix B.
Valerie J. Lithotomos
August 31, 2015
Page 4 of 4
Comment No. 8: Confirm that the expense reimbursement is reflected for only one year in the expense examples.
Response 8: The expense reimbursement is reflected for only one year in the expense examples.
Comment No. 9: Define “other similarly structured investment vehicles” under “Investment Objective & Principal Policies and Risks - Pooled Investment Vehicles.”
Response 9: Registrants have removed reference to “other similarly structured investment vehicles” under “Investment Objective & Principal Policies and Risks - Pooled Investment Vehicles” in the Draft Prospectus (see page 9) and will similarly revise the disclosure in each Fund’s prospectus included in Pre-Eff. No. 4, including under “Fund Summary – Principal Investment Strategies” in the prospectuses of Bernstein All Asset Strategy NextShares and Bernstein Equity Strategy NextShares.
Comment No. 10: Update the Puerto Rico disclosure in the Municipal Fund prospectuses, if appropriate.
Response 10: Disclosure relating to recent events in Puerto Rico has been updated under “Fund Summary - Sector and Geographic Risk” in the Draft Prospectus (see page 5) and will be updated in the prospectuses of High Yield Municipal Income NextShares and National Municipal Income NextShares in Pre-Eff. No. 4.
Representations:
The Trusts acknowledge that:
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should the Commission or the Staff, acting pursuant to delegated authority, declare the filings effective, it does not foreclose the Commission from taking any action with respect to the filings;
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the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the filings effective, does not relieve the Trusts from their full responsibility for the adequacy and accuracy of the disclosure in the filings; and
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the Trusts may not assert this action as defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions or comments concerning the foregoing, please contact the undersigned at (617) 672-8305.
Very truly yours,
/s/ Maureen A. Gemma
Maureen A. Gemma
Vice President